Andreas dorsch the european central bank’s low interest rate policy, which has been in place for years, has meant that traditional savings no longer yield any returns. Instead of depositing money in a savings account, you could also deposit it under your pillow. Nevertheless, there are still opportunities for investors to generate returns.
Karl-heinz breunig, head of asset management at the erlangen-hochstadt-herzogenaurach savings bank, recommends stocks and real estate, for example. The FT wanted to know from the expert how a young professional can optimally invest 100 euros a month. If the young person is safety-oriented, breunig recommends paying 100 euros a month into an open-ended real estate fund.
Two to three percent
Here investors can participate in real estate with small amounts. Such open funds usually buy commercial real estate such as burohauser or retail properties. Shares in open-end real estate funds can be bought at any time and sold again after a period of at least two years. Breunig sees a relatively safe annual return of two to three percent here.
If young people are more willing to take risks and are able to withstand fluctuations in share prices, breunig suggests investing their monthly savings in an equity fund. This should be a worldwide oriented. With this type of investment, it is important to follow through with a previously defined savings plan. Those with staying power can expect an average return of five to six percent. This form of investment also compensates for price fluctuations on the stock exchange, as purchases are made both when prices are high and when they are low.
Breunig advises customers who want to be on the safe side to invest in the pension area. Pension funds – although the term pension should not be confused with retirement provision – invest money only in fixed-income bonds. Interest is only available on corporate bonds, emerging market bonds or in foreign currencies.
The half in shares
How do i currently invest an inheritance of 10,000 euros?? If the heir has seven to ten years and can withstand fluctuations, breunig recommends investing half the money in equities. The first 2,500 euros were to be invested in a one-time equity fund, the second 2,500 euros in a monthly savings contract to compensate for price fluctuations.
Breunig would put 15 percent into an open-end real estate fund and purchase bonds/annuity funds for the remainder.
Whether it’s a small monthly sum or a large inheritance, wealth advisor karl-heinz breunig advises all those who want to invest money to first seek competent advice and learn about all the risks.
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