Should you save your money at home or in the bank?

How can you best save money in Germany? It’s probably safe to say that there is not a single person who does not think about this from time to time.

Studies show that people in Germany like to save money. In fact, 53% stated that they set money aside on a regular basis. During the coronavirus crisis, this proportion even increased to 63%.

In light of this, it seems clear that people are in favour of saving money in Germany. But there is no consensus on where the money should be kept — in a safe at home, under your mattress or in a bank?

Many savers swear by their bank accounts, however, a lot of money is still traditionally kept at home.

But is your home really the best place for the money you are saving?

In this article, we would like to address the essential questions of how to best save money in Germany and where to keep the money you have saved. After all, the decision whether you want to save your money at home or in the bank is a crucial one.

Saving money in the bank

Saving money is important for the future — this is something we all learn as children. The safest way to do this is to put your savings in a bank account. After all, in your account, your money is free from most risks and can slowly accumulate over time.

But does this still apply today?

It pays to look at current interest rates to see whether it’s still appropriate to save your money in the bank or whether there are better alternatives.

Is it still worth saving money in the bank?

For years, saving money using your bank account was the most popular way of saving among people in Germany. But now it’s hardly worth it, because traditional forms of investing such as regular savings accounts, overnight money or fixed-term deposits hardly offer any interest. Quite the contrary, many banks currently have a negative interest rate. This means that not only don’t you earn any interest, but you even have to pay for investing your money.

Even with low positive interest rates, which reach a maximum of 0.5% nowadays, savers suffer disadvantages. For example, if you save EUR 1,000, a 0.5% interest rate would add EUR 5 to your money in one year. The account balance would be EUR 1,005 at the end of the year. With an inflation rate of 1%, however, your money’s purchasing power would only be EUR 995. Despite the interest payment of 0.5%, you would be in a worse position as a saver.

That is why spreading your money wisely and investing it correctly is important. This means: leaving your money in the bank might not be the most sensible thing to do!

Saving money at home

When asked whether they save their money at home or in the bank, a growing number of people in Germany are likely to respond that they save money at home.

If you’re considering this option, it’s best to keep quiet about it. Large amounts of cash tend to attract thieves, and if someone gets wind of your savings tactics, your house may be targeted.

The only way to protect yourself is by installing surveillance systems and purchasing a certified safe. A proper set-up costs several thousand euros.

 How can I insure my money at home?

Insuring cash at home is rather complicated, as cash is only partially covered by most household insurance policies. 

If a theft occurs, most insurance companies have a maximum limit. 

If you are considering using a safe to store money, keep in mind that most insurance policies require it to have a high level of security.

Our conclusion: saving money at home isn’t the best idea.

In principle, the more money you want to store, the more expensive the safe will be. Since you can’t expect your money to grow while it’s in a safe, you’ll end up losing part of your assets through investing in an appropriate safe.

It’s important to have a certain amount of money set aside for emergencies, even as you focus on long-term savings. There’s always the possibility for an unplanned bill or an unexpected expense to arise.

However, the decision to save money at home (i.e. in a safe) or in the bank is up to you. 

How can I save money? 

The first step is to actually make a conscious decision to save money.

Once you’ve made this decision, it’s important to know how saving money in Germany works best. We’ve put together a comprehensive overview that will help you save money and make it easier for you to take the first step.

The key thing is how much you earn with the money you saved. Investing money is a great alternative to simply saving your money because investments generally have better yields.

In Germany, many people are concerned about the risk of their savings decreasing in value if the investment doesn’t work out. But this risk can be minimised by proper management and diversification of the investment.

Inyova has written a quick guide that explains in greater detail how to reduce the associated risks of equity investments. Read the guide “Reduce your risk on the stock market” here.

Together, we’ll create your portfolio, so that it can grow with the stock market in the long run. In the past, this form of investment has led to average returns of 6% per year, although individual results may vary and past performances cannot predict future performances.

Since the stock market is constantly changing, the returns are also subject to fluctuations. Therefore, it’s even more important to opt for a long-term investment. 

With Inyova, it’s easy to set up an individual savings plan. It’s tailored to your individual needs and enables you to add money automatically to your investment every month. There’s no obligation, and you can stop, suspend, or adjust your savings plan at any time.

Inyova offers you a completely diversified investment portfolio which is transparent and based on our experience. The stocks in your portfolio originate from companies in different industries, countries, and currencies. Like this, the risk of losing money in a crisis is distributed among different factors, and you don’t put all your eggs in one basket. 

With Inyova, you’re also free to choose which companies to invest in. Our algorithm ensures that your investment makes sense, even if you decide to change your portfolio.

What does it cost?

At Inyova, transparency is key. We charge you an annual fee between 0.6% and 1.2% of the total balance in your account, depending on how much you invest. This is calculated according to the current value of the investment and can be viewed online at any time.

There’s no question about it: saving money requires discipline and perseverance, as it goes hand in hand with sacrifice. But with the right strategy, saving money can be fun and yield good returns.

Do you want to combine financial profits with ethical and sustainable investments? Get your personalised impact investing strategy here – it’s free and non-binding. Using our easy online tool, you pick investment themes based on your personal values and interests.