Inflation increases the prices of services and goods significantly. But pensions are not rising at the same pace – and many people are concerned about their retirement provisions. How can private old-age provision still be secured at the moment? Here are a few tips.
In principle, it must be clear to everyone that the statutory pension alone is hardly sufficient to maintain the standard of living you are used to in old age. Employees must therefore make additional private provisions for old age. If you only rely on savings accounts and overnight money, you risk that inflation will severely reduce income.
David Tappe is a financial expert as well as the founder and CEO of Tappe Consultig AG.
The phenomenon of inflation is not new, quite the opposite. In the past hundred years, people in Germany have experienced many ups and downs. In 1923 and 1948, the inflation rate was so high that simple groceries cost millions.
Even today, the word “hyperinflation” is haunting the media again, but compared to earlier times, our assets are still relatively safe with an inflation rate of over seven percent. David Tappe therefore advises not to panic, but to understand the mechanisms of the financial market and act prudently.
But what exactly is this inflation and how can private investors protect their retirement provisions? Inflation occurs when the prices of goods and services rise faster than wages and pensions. In short: income stays the same, but prices go up. Of course, that scares a lot of people, especially with regard to the future. Will inflation devalue money to such an extent that carefully planned retirement provision will ultimately lead to poverty in old age? David Tappe advises: “Those who keep calm and act shrewdly can plan their retirement provision in such a way that a carefree retirement remains realistic!”
What is said to be low-risk is sure to result in losses in times of inflation. Because when it comes to low-risk investments, we think of accounts and savings books.
“Many think that their money is safe in the bank and can work in peace,” says David Tappe. However, if the inflation rate is higher than the interest on savings, there are effectively losses. It is better to take the money you have and invest in risky assets. Here, however, important details are important in order to minimize the risk and maximize the return.
To determine the right strategy, savers should first consider what goal they want to achieve. The most important question is: How much pension do I want to draw later and how much depreciation do I have to reckon with by then? Investment must fill this gap.
It is not advisable to use supposedly simple solutions or quick money. Investing in cryptocurrencies or precious metals is not a good idea. Real estate is also not as safe as its reputation, because the value of a property depends on the fluctuating demand on the real estate market.
Long-term investments that guarantee predictability are better because they work according to scientific methods. These so-called evidence-based models offer high returns and a lot of security. If you want to get competent help on board, it is better to rely on an independent financial advisor. Because banks and insurance companies sell financial products that do not always correspond to the interests of investors, but also to their own.
The FOCUS Online guide answers all important questions about pensions on 135 pages. Plus 65 pages of forms.
