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Investment opportunities What to do with the savings in inflation?

Status: 22.06.2021 12:28 p.m.

Even in times of rising prices and zero interest rates, many Germans have their money in savings books or call money accounts. But if you want to protect your savings from inflation, you need alternatives.

From Lothar Gries, tagesschau.de

Consumer prices in Germany rose by 2.5 percent in May – more than they have been for almost ten years. At the same time, there is practically no more interest on overnight and fixed-term deposits, the most popular form of investment among Germans. Cash is also in great demand. The value of the notes issued by the Bundesbank rose by 9.5 percent last year. A similarly high growth rate was last seen in 2014. At the end of May 2021, banknotes issued by the Bundesbank to the value of 839 billion euros were in circulation, 52 billion or 6.6 percent more than a year earlier. But if you want your money to grow, you have to consider other investments than hoarding cash or putting it on savings accounts. There is no shortage of alternative investment opportunities. The long lucrative federal bonds are no longer one of them. The yields on these securities have fallen below zero since August 2019. Investors who lend money to the German state have to pay for it – a turning point, as they still got a return of five percent at the beginning of the millennium. “Today federal bonds have no place in assets that are designed to maintain or increase in value,” explains Ulrich Kater, chief economist at Deka-Bank, which is part of the savings bank group.

No prospect of rising interest rates

Investors should also not give in to the hope that consumer prices, which have recently risen again, will lead to higher interest rates. Inflation is likely to accelerate further until the end of the year, but the European Central Bank (ECB) has repeatedly emphasized that it will adhere to the zero interest rate policy. The priority is to stimulate the economy again after the corona crisis, said ECB boss Christine Lagarde. In addition, the current rise in inflation is only temporary.

Investments that are considered to be risk-free, such as savings books and fixed-term deposit accounts, no longer offer any prospect of positive returns for the time being. In order for the saved to experience growth, stocks in particular offer themselves as a way out. Fund savings plans, for example, are a good way to get started. Investors pay regular amounts, in many cases from 25 euros upwards, into an investment fund in which various securities are bundled and which is managed by professionals. Alternatively, of course, investors also have the option of taking their money into their own hands and buying shares in individual companies on their own. In the past few years, you couldn’t go wrong when buying technology stocks.

Alternative ETF?

If you don’t dare to do this, but still want to invest in stocks, you can invest your money in a so-called Exchange Traded Fund (ETF). These funds replicate a stock market index (often with so-called derivatives). This can be the German share index (DAX) or other indices such as the US leading index Dow Jones. The performance of an ETF is closely linked to the respective index. As a result, the fees are usually lower than with other funds. Investing in the stock market is of course not without risk: If the index behind an ETF falls because the stocks in it fall, the fund also loses value.

Nevertheless, ETFs are enjoying growing popularity. According to industry experts, there are almost 7,000 of these funds. This is also due to the low interest rate phase. It ensures that more people invest their money in funds than before. Many have done well with this strategy and have achieved better returns than they would have achieved on a call money account. For example, an ETF on the DAX alone has generated a return of 55 percent in the last five years – provided that you kept your nerve at the beginning of the pandemic and did not sell when the markets collapsed by a third in spring 2020.

Gold and open real estate funds

A popular investment, especially in times of crisis, is gold. The corona pandemic has confirmed this again. By early August 2020, the price of a troy ounce (31.1 grams) had risen to an all-time high of $ 2,063, around a third more than at the beginning of the year. But then things went downhill again, to $ 1,684 in March. It is currently $ 1,775. In fact, gold is extremely volatile because the price is mainly driven by demand, because it has no “intrinsic value” like companies do. The precious metal is therefore not considered a reliable investment. There is also the often unsafe storage of bars or coins.

Those who shy away from the capital market and don’t believe in precious metals can also invest their money in real estate funds. They collect capital from investors and invest it in offices, shopping centers, residential buildings or logistics centers. The so-called open real estate funds are particularly popular with private investors. The income from such a fund, i.e. the rental income after deducting costs, is distributed to the owners as profit. With well-managed funds, an annual return of four to five percent can be achieved, a little more than the inflation rate.

Sometimes there is a risk of total loss

But the system has a catch. A minimum holding period of 24 months applies to open-ended real estate funds. An investor must also announce the return of his money to the fund company. Then he will get his system back after twelve months at the earliest. So if you have to get your money at short notice at any time, you should refrain from such investments.

The examples show that there is no shortage of alternatives to the savings book or a federal bond. But if you want to increase your money, you also have to be prepared to take risks. In some cases, for example when purchasing shares, there is even a risk of total loss, as the example of Wirecard recently showed. A look abroad – especially the USA, where far more people own shares than in Germany – shows that long-term wealth can only be built up with investments in the capital market

Some people in the group filing the denunciation said more than 600 applications have been sent to the authorities from April 19 to the present. Investors practiced more than 400 denunciations to send to the Ho Chi Minh City Police on the afternoon of April 23. Photo: TA According to the accusers, Coolcat introduced as the company providing investment transaction insurance platform. Coolcat has an exchange that specializes in trading gold, USD, Bitcoin, short-term price prediction trading. The participants in the system only need to download the Coolcat software to their mobile phones and log in with their phone number to start investing. The job of each investor is to press to predict the price of Bitcoin, gold, and foreign currency up or down. If their guess is correct, they receive 73% of the winnings. If they are wrong, their capital will be deducted. But when losing 6 times in a row, the investor must stop and report to the system for 100% compensation. The insurance reimbursement is committed automatically by Coolcat within the same day. In addition to predicting the price of Bitcoin, gold, and foreign currencies up or down to earn interest or receive insurance money. Investors also make money by introducing new members, commissions up to 1.8 million VND each time. The Coolcat Company’s website advertises that they have a British holding corporation and is licensed by the Bahamas Securities Commission. This company also introduced a representative office located on Nguyen Huu Canh Street, Binh Thanh District. Coolcat Company has held many events at 5-star hotels to increase trust with investors. Photo: Website Coolcat. This website also introduces them as the only company that insures 100% of trading capital in Vietnam, so “absolutely safe, not afraid of losses”. Coolcat has 2 main websites: https://www.coolcat.com.vn and https://coolcatvietnam.com. Currently both websites are inaccessible. According to those who have played Coolcat, Coolcat has organized many events at 5-star hotels and invited investors to attend to increase confidence. On the night of April 17, all the applications related to the Coolcat system suddenly crashed. The websites related to this company cannot be accessed. The entire amount of money the investors submitted to the application are paralyzed, not withdrawn. One investor said that by the time the Coolcat application “collapsed”, there were more than 68,000 members. Many of them have billions of dong frozen in the application. Investors then went to Coolcat headquarters in Binh Thanh district to work with the representative, and found that this was just a virtual location, without any representative offices or people in charge.

Guaranteed 100% capital, interest? Talking to reporters Workers On the evening of April 20, an investment participant on Coolcat said that she was introduced by an acquaintance as a 100% capital and profitable money investment application. “That person said that it was good to invest, considering the daily market money, so I joined and transferred there 3.8 million VND” – she said. The above investor mentioned that after investing, she was instructed to install the application and each day click to predict Bitcoin price, gold price up and down. After each day of playing, investors will have a profit of 2-3 USD. When collecting enough interest at least 10 USD, players will be withdrawn. “I see no matter what the prediction goes up or down, I eat all the money so I giddy. With 2 times profit totaling 22 USD within 20 days, the application crashes, as if I lost the remaining capital” She said she wanted the authorities to step in to clarify the case and handle the fraudster. The woman also said that her investment in the Coolcat app is very small compared to many others. In her group, there were many people who lost a lot of money and did not know how to get it back. However, many people still dream of getting back the lost money. On the Facebook page “Coolcat Vietnam – Safe investment”, a member named PBT posted an article with the content: “Anyone who is fooled at Coolcat, join the group with their determination to get back”. Similarly, another member named DMT also advertised a reasonable method of playing with support tools so that players could get their lost money back from Coolcat. Even the members said that after the Coolcat app collapsed, a smaller amount of capital could be invested in similar apps and more profitable than the lost amount. Notably, these articles have been interacted and responded to by quite a few members. People who lost money because of the Shopping Mall app went to Vinh Phuc province police to denounce. Photo: NVCC Many forms of fraud Another money-making platform also attracts investors, making many people “disillusioned”, called Shopping Mail. News source Workers said the Criminal Police Department (PC02) Vinh Phuc province police received a denunciation from the user of the Shopping Mail shopping app (http://shop555.cc). As a reflection, this person is introduced to you Shopping Mail app with conditions to register for an account, then top up at the shop to hunt for orders and receive commissions according to rank. Specifically, level 1 receives 16%; level 2 receives 8%; Level 3 receives 4% of the order value received. Content of money transfer is the phone number registered app. “Due to the referral, I registered to open an account, then transfer the money to the account numbers provided by the app. On April 14, I could not access the website http://shop555.cc , the entire deposited amount is lost “- said the applicant. Another investor shared that she lost tens of thousands of dollars just because she participated in profitable financial investment projects. In it, at a project called NDT, she lost up to 40,000 USD, affecting her family happiness. “The initial amount to participate in financial investment projects is my savings. After that, I lost money, I borrowed more to invest, but lost money, debts piled up” – she lamented. Financial expert Phan Dung Khanh said that the current financial investment scams are as many as mushrooms after the rain, targeting those who are only interested in the advertised profit without being equipped with knowledge, lack of knowledge. alert. It is easy to see of these fraudulent exchanges in Vietnam, according to Mr. Phan Dung Khanh, that “cover losses, burn accounts, commit profits” … Vietnam offices of these floors are often discreet in high-rise buildings, without signs, only a few sets of temporary furniture and can disappear in just a few hours … Or the floors are introduced to offices, headquarters abroad but in fact is without a license. Therefore, putting money into these exchanges, “investors” will not be protected by the law in case of incidents and the risk of empty-handedness is very high. Therefore, people need to be careful, learn carefully.

Specifically, with the above violation, Becamex was fined for false declaration of nearly 8.5 billion VND, the late payment of value added tax was more than 2.9 billion VND, the late payment interest of corporate income tax. industry is more than 1.4 billion. Becamex Industrial Development and Investment Corporation was fined and had to pay 57 billion VND. According to the decision of the Tax Department of Binh Duong province, Becamex corporate income tax to be temporarily paid in 2020 is 1.87 billion VND, temporarily not sanctioned for false declaration and late payment interest due to the deadline for the inspection conclusion. time of submission of corporate income tax finalization declarations. Thus, the total amount of fines and tax arrears that Becamex has to pay into the state budget is more than 57 billion VND. In particular, Becamex has fully paid the arrears of corporate income tax and value added tax of 2019 and 2020 into the state budget on February 25. Regarding the business situation, accumulated in 2020, BCM’s net revenue reached 7,723 billion VND, a decrease of 6% compared to the previous year, profit after tax reached 2,149 billion VND, a decrease of 18% compared to 2019. In 2020, Becamex planned Total revenue target is 6,016 billion VND, EAT is 931 billion VND, 40% and 65% lower, respectively compared to 2019. Accordingly, although the business result is lower than 2019, BCM still has completed. successfully exceeded 28% of its revenue target and reached 131% of its profit after tax target. As of 31/12/2020, BCM’s total assets increased by 10.7% compared to the beginning of the year to 48,190.8 billion dong. In which, main assets are inventories reached 24,165.6 billion VND, accounting for 50.1% of total assets; long-term financial investment reached 11,893.5 billion VND, accounting for 24.7% of total assets; Short-term receivables reached 3,655.4 billion VND, accounting for 7.6% of total assets. In the fiscal year, total short-term and long-term loans increased by 2.4% compared to the beginning of the year, corresponding to an increase of VND352.6 billion to 14,900.3 billion and accounting for 30.9% of total capital of BCM. . Thu Ha (Th)