The Smart Alternative to Savings Accounts

Need a compelling reason to invest your money somewhere other than your bank account? You don’t need to look further than your bank account itself.

Take a look at the interest rate assigned to your account. If your savings are sitting in any major German bank, this number will be hovering somewhere around 0.01 percent.

That means your balance will increase by just EUR 1 per year on a EUR 10,000 balance. In 5 years, your wealth will have grown to the great heights of EUR 10,005.

Unfortunately for your savings goals, that’s the best-case scenario. There are also bank fees to consider.

Added to that, inflation is now on an upward swing in Germany, meaning the price of goods and services is slowly increasing (for instance, in 2001 a BigMac cost EUR 4.80. Now it costs EUR 5.29 ). Let’s assume inflation holds steady at today’s rate of 0.7 percent per year. What effect would this have on the real value of your money?

In five years time, you would need EUR 10,350 to buy what you could have bought with EUR 10,000 today. Meanwhile, your bank account will have only grown to EUR 10,005 – making you poorer than you were when you deposited your savings.


So, what’s the alternative to a bank savings account?

Looking at it from a long-term perspective, the stock market has historically yielded around 6 percent annual return – or around 4.6 percent when you subtract the effects of inflation.

Of course, historical returns don’t predict what could happen in the future – the opportunity for greater returns always comes with greater risk. It’s important that you go into any stock market investment with a full understanding that you could potentially lose money.

Let’s take a look at this chart:

Stock Market Performance 2005-2021

Here, you can see the markets took a major hit during the Global Financial Crisis. This lasted from 2007 until around 2009, when the markets started to rebound. Shorter-term investors who withdrew money from the world’s stock markets between 2007 and 2009 are likely to have suffered steep losses.

On the other hand, investors who were able to ride out the storm for a few years, would now be making strong gains again.

This is one of the key reasons why it’s important to take a long-term view of any investment in the stock market. The last thing you want to do is panic and sell your shares in a bad market.


What’s the lower-risk investment option?

For those who want an investment that’s less prone to market fluctuations, there are other options. One of them is ‘fixed-income securities’, which includes things like bonds.

Countries and large organisations use bonds as a way of borrowing money. Generally speaking, both are pretty good at paying the money back on time, along with a pre-determined interest rate. These types of investments provide lower returns than the stock market, but are also considered safer because they are less volatile.

Take, for example, a 3 percent fixed-rate bond that’s based on a 5-year term. A EUR 10,000 investment in these bonds will result in an annual EUR 300 payment until maturity, when the investor will also receive the original EUR 10,000 back… a tidy EUR 1,500 gain by the end of the investment period.


Can I combine bonds and stocks into one investment?

With Inyova, your customised portfolio strategy can be based purely on stocks, or it can include a mix of stocks and government bonds. We adjust the ratio of stocks and bonds to create a portfolio that works for your financial situation and your personal preferences. Regardless, we will mitigate your risk by diversifying your investment across companies in different industries, company sizes, countries, and more (find out how we do that here).


Sounds great, how do I get started?

The first step is to get your personalised impact investing strategy – it’s free and non-binding. Using our easy online tool, you pick investment themes based on your personal values and interests. We show you exactly what stocks we recommend you invest in.

From there, our team will create a personalised investment strategy for you to consider. This is completely free & non-binding.

Tillmann Lang

Tillmann Lang

CEO and Founder

For many years, Tillmann has been working on the question of how to make the world more sustainable – and the role finance has in this transition. Before founding Yova, Tillmann worked for more than 6 years at the strategy consultancy McKinsey & Company.