Wednesday, August 28, 2013

The Germans financial situation


Germany, Economy, spiral, up or down


By reading other blogs especially in other countries one gets good ideas for articles that can be written and then especially with Germany in focus. As mentioned before I like the German governmental page for statistics and now there was an excellent moment to go and visit them again actually due to two reasons. One was based on the blogger in Sweden that wrote about the financial assets for Swedish people please read the article that is in Swedish here. The second thing was that during spring / early summer there were plenty of articles talking about how the wealth in Germany was very low in comparison to many countries in the south. Here is one such article that can be read that summaries it with:




Given the comparative differences, German household net wealth comes out to around €51,400 compared to Cyprus at €266,900 and Luxembourg at €397,800. Greece ranks in at €101,900, France at €113,500, and Spain at €182,700. If we look at Germany per person we are down at €32,800.

I think I have mentioned that before but there are historical reasons for why Germans have so little money. First is that they generally do not own their own property but tend to rent and secondly it cost billions join west and east Germany together  and every one in east had no money at all... over 20 years later that situation has little changed...

So now there was two reasons to start looking at what is that situation like in Germany. I of course also find it interesting to see if I could find out how much money Germans generally are putting into stocks because I have met no one around me (almost only German academics) that have and are investing in stocks today and soon they must realise that it is one of the few roads that makes sense.

The statistics that I found is calculating households in Germany. In some cases did not like this way of looking at it so I made a recalculation of it based on what I was looking at and especially I wanted to bring in male, female and per person instead of household.

Starting off by looking at the household income I would say that it is generally not very high because only 20% of the households have a net income of €3,600 and what is much, much worse is that over 40% of the German households has a net income of below €2,000. This means that only one or none in the household is working and not only that but also have a low paying job.


40% below 2000 euro


As mentioned already above the Germans are mainly renting their homes and what we see here is that it is as high as 47%. This means they have no profit from inflation which would increase the value of their property as well as decrease the loan that they took on it. They rent so they have to pay that inflation increase to the landlord each year.

47% rent

If we take a look at the assets and debts then each German person have assets of €32,800, they have debts of €18,200 and the few 53% that have homes they are valued at €66,300. This in principle means that the average homes are worth €122,600. The sad thing here is that my own situation is looking pretty much like the German one.... today... I hope that I will manage to break out of that in the future. The debts that they have are not very high but that mainly comes from them not owning their homes and therefore also do not have a leverage or reason for high debt.

32k per person

When we dig into the financial situation and separate it into female, male and per person we see that the males have almost double financial assets in comparison to females. I wonder why this is? Is it an effect from that still in west Germany it is very common with housewives that take care of the kids especially since kindergarten etc. is expensive. Or do they have a large quantity of single mothers?

Males have 40k euro

Now we take a look at these financial assets and then we see that per person the Germans have around €9,700 in Stocks etc. €14,000 in bank savings and €9,100 in Other savings which is actually mainly life insurance. The males have more than double amount of money into Stocks etc. in comparison to females, they have around 70% more saved in bank accounts (with low interest, come on people take it out of there!) and they have doubled amount placed into life insurance. It is sad to see how much money they have on their bank accounts today.

only 10k euro in stocks

What does then that stocks etc. actually mean? Here we can see that it is divided into Stocks, Bonds, Funds etc. The average German have €2,750 invested in Stocks, have €1,250 into bonds and they have placed €4,600 into various funds. The males have now almost three times the amount of money in stocks, 2,5 times into bonds and double the amount into Funds etc. in comparison to females. I would have expected a bigger difference here. Maybe more bonds and/or funds for the females in comparison to the males but I find that the ratio is pretty similar. Still three times the amount of money into stocks will due to compound interest mean a lot of money in the end.

main part goes into fonds

Finally we will just take a peak at what are these funds etc. and then we see that it is built up of Stock funds, Real estate funds, Bond funds, Currency funds and Other funds. The average German person have placed €2,000 into Stocks, €700 into Real estate, €550 into Bonds, €400 into Currency funds and €890 into Other funds. The males here have 2,5 times as much into stocks.

most goes to stocks

Looking at the total picture we see that €6,191 into stocks by adding what they directly have as well as what they place into stocks via funds. For females the quantity is €2,477 into stocks. If we count with the compound interest of 10% for 30 years on these amounts then the female will end up with €43,000 and the male would have €108,000. Neither quantity will be able to support them when they have retired.

I hope that Germans will start to realise the benefit of having stocks and not only that but also that they will realise that for a pleasant retirement they will have to start doing something already today and that only way is to increase the amount of stocks. If we make the same calculation as above but add in the amount of money that they today have sitting in the banks savings account then the male will end up with €398,500 and the female with €216,000. This is looking a bit more comfortable for retirement!

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