When it comes to dear money, we Germans are a strange people. On the one hand, we are considered busy, economical and even the world champion in savings. On the other hand, however, we do not invest our money in a profitable way. This in turn means that we are not leaders in terms of wealth. Not even a bit.
Now there is a new number that every German citizen should know: The one of 1,364 euros, which apparently every German hoarded on average. Let us therefore take a look below at how this amount could become EUR 10,383 over a period of 30 years. Or 866 euros. And best of all: you have the choice of which fate you want to choose.
Did you also hoard € 1,364 in cash?
As a recent evaluation by the Bundesbank has shown, every German hoarded 1,364 euros in cash. Not necessarily on his checking account or a fixed deposit solution. No, but really at home in cash. Or within a safe deposit box. This value is likely to be distorted by several factors: For example, not everyone has a safe deposit box. Nevertheless, the bottom line is remarkable.
The reasons too, albeit secondary. As the Bundesbank found out later, liquidity plays a role. Or the function of cash as a means of payment. A few would like to hide their money from the state, the survey found. The range of possible answers is complex here. But mostly for legitimate reasons.
In addition, every German would carry around 107 euros in his wallet, as the Bundesbank also found out. But now it comes down to it: because hoarding cash can be a really expensive mistake, which is just not safe. It’s costing you money. Or at least purchasing power.
10.383 € or 866 €: You have these 2 ways!
If you simply bunk your money in cash on your claw or under your pillow or in the safe deposit box, you risk losing value over the long term. Your money will remain absolutely safe if it does not eat up a rodent. In relative terms, however, your money loses purchasing power. This effect is anything but irrelevant over long periods of time.
Even if we take into account below-average inflation of 1.5%, the value of the 1,364 euros would decrease within a period of 30 years to only 866 euros. This means that approximately 36.5% of the value expires over this period, which remained unused. Definitely not a trifle.
However, if you make the smart decision and invest the money (and refrain from hoarding it), you will generate significant wealth growth in the long term. If we assume an average return of 7% per annum that is customary in the market, this amount of money would increase to EUR 10,838 within 30 years. The difference to the original amount is already gigantic, just like that to inflation devalued.
Is it worth it to you?
The ultimate question, of course, is now: is it worth it to you? Sure, there may be reasons to have money on the high edge. Or in cash. Or finally in the bank. Already the amount of 1,364 euros shows that a lot is possible in the long term. Or just a little if it remains unused. It is important to maintain the value at least in the long term. Without a return, however, this will be difficult.
The post Do you also hoard € 1,364 in cash? Over 30 years this could turn into € 10,383 – or € 866 appeared first on The Motley Fool Germany.
Motley Fool Deutschland 2020