liquidity
The first goal to aim for when investing according to the magic triangle is sufficient liquidity. It is particularly important for investors to be able to access means of payment quickly and easily in order to be able to meet any payment obligations immediately.
For this reason, Stiftung Warentest always recommends keeping two to three months’ salary in the account as a reserve in its advisory financial magazine “Finanztest”. Even if the interest rates in Germany for call money accounts are currently very unattractive for investments and are close to zero, customers with this investment method have the option of accessing their stored money at any time. According to Stiftung Warentest, for example, forced access to the current account overdraft facility should be avoided if there is a lack of liquidity due to the significantly higher debit interest.
safety
However, the annual Gothaer study on the investment behavior of Germans shows that people in Germany have a different focus when it comes to investing. In a random survey of 1,001 German citizens in January 2020, 52 percent of those surveyed said security was the most important goal when investing. The “security” cornerstone of the magic triangle means, above all, the preservation of assets. Therefore: German investors absolutely want to avoid that the money they have invested in the account becomes less in real terms. To avoid this, customers are willing to neglect another corner of the triangle, profitability.
Because according to the consumer advice center in Saxony, greater security leads to lower yields; the goals of security and profitability therefore compete with one another when it comes to investing. With luck, according to the consumer advice center, Germans can just about compensate for inflation at the current interest rate level and thus maintain the purchasing power of money, but by no means increase it. According to experts, examples of secure investment options are fixed-interest investments, such as bank savings plans or time deposit accounts.
profitability
According to the results of the Gothaer study, German investors regard high returns as the least important criterion for their investments. For only ten percent of those surveyed, profitability is the most important factor when making investment decisions. Nevertheless, Karin Baur, an expert at “Finanztest”, advises in an interview published by Stiftung Warentest on the courage to make returns: “Nobody should take more risks than they can or want to. But if an investor wants a higher interest rate than the current safe interest rate, then he stays nothing left but to mix in riskier investments,” explains the expert to Stiftung Warentest. For this, Baur recommends shares in the form of broadly diversified equity funds.
“We always recommend mixing different forms of investment when investing. If you have only invested in interest so far, you could spice up your savings with a small proportion of equity funds, for example,” advises the expert in the interview. Her colleague and financial expert Michael Beumer also supports the advice and recommends using riskier investments as an admixture. According to Baur and Beumer, shares or ETF fund savings plans are particularly suitable for this.
Other investment decision factors
Nevertheless, according to the industrial engineer Markus Scholand, the investment decisions of the Germans are not only limited to these three goals: “Many people do not decide about investments only on the basis of return, risk and liquidity,” explains the financial expert in an interview with the Stiftung Warentest. According to Scholand, “the location of branches, the type of advice, the sales channel, gender, “social status” or current topics in the media” are also decisive factors when investing. According to the expert, even the availability of parking spaces can play a role in customer investment decisions.
Pauline Breitner / Editor finanzen.net
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