When it comes to retirement provision, Germans prefer real estate to stocks.
(Photo: dpa)
Frankfurt Demographic change poses a challenge for statutory pensions in Germany. Against this background, private provision is gaining in importance. However, the acceptance of equity investments can still be improved, as shown by a survey by HDI Lebensversicherung among almost 4,000 employees in Germany, which was previously available to the Handelsblatt.
According to this, four out of ten respondents think that “investing in stocks is too risky to invest my money in” or “too complicated”. HDI is part of the Retail Germany division of the Talanx Group. With gross premium income of around 1.6 billion euros (HGB), HDI was one of the largest life insurers in Germany in the 2021 financial year.
The skepticism of Germans towards stock investments is also reflected in the fact that only one in five employees (21 percent) does not expect a sustained crash on the stock exchanges in the coming years. The respondents are all the more pessimistic about the stock market the lower their income is.
Real estate, on the other hand, is particularly popular as a form of retirement provision. 47 percent of those surveyed named owning their own home when asked “Which possibility of providing for old age do you have the greatest confidence in?” The statutory pension is ranked sixth at 18 percent.
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In this ranking, the HDI survey on old-age provision also reveals a mixed picture. Because even if 40 percent are skeptical about equity investments: 25 percent see securities such as shares or funds as the best form of old-age provision. They thus occupy second place in the HDI ranking.
Fabian von Löbbecke, who is responsible for products and new business on the board of HDI Lebensversicherung, therefore sees a blatant contradiction in the mood of the survey: “The majority of working people recognize the advantages of investing in shares for building up old-age provision. But 40 percent still shy away from it out of fear or uncertainty. Clarification is therefore urgently needed. In particular, investment opportunities that can minimize or even eliminate price slumps.”
46 percent of those surveyed are convinced that stocks are well suited for building up a pension plan. As many as 57 percent agree that “stocks generate better long-term returns than interest-bearing investments such as savings accounts.” More than one in three (36 percent) also sees stocks as protection against rising inflation rates.
One possible explanation for the skepticism is the stock market’s poor performance this year. The German leading index Dax has collapsed by up to 25 percent this year and is currently ten percent in the red.
This skepticism cannot be confirmed empirically. Historically, the stock market has generated an average annual return of eight percent despite price fluctuations. However, this is no guarantee for future performance.
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