Anyone who has saved their lives for their retirement understandably eschews the risk. But while in the past investments in fixed-term deposits and overnight money still yielded a lot of interest, interest investments today bring almost no income. If you add inflation to this, most savers are likely to lose capital.
Does that mean that in retirement I inevitably have to watch inflation eat away at my savings? Fortunately not. Well thought out, there are useful ways to keep growing your wealth on the stock market, even in old age:
Those who are 65 years old today often have 15, 20 or more years to live. A period of time that makes it possible, under certain conditions, to participate in the stock market and make profits. In such a case, broadly diversified equity funds or an ETF index fund such as MSCI-World are also suitable after retirement, as numerous countries and industries are included in the index and possible risks are thus kept low. Important here: make sure to avoid a strong overweighting of individual countries or industries. A common mistake made by investors is that they concentrate too much on their own home market, i.e. Germany.
Higher return opportunities also entail higher risks, but fluctuations or price drops are usually offset over the length of the term. On average, it takes five years for such stockquakes to level off. This means that you should have time to be able to sit out price drops and fluctuations, because you should never find yourself in the situation of having to sell shares at an inconvenient time of all times. Viewed over 30 years, however, the average growth amounts to around 7% per year, despite all the stock market slumps.
In order to take the plunge into equity water, however, the decision must first be carefully considered. The most important question here is: “How much money do I need per month in old age?” Ideally, recurring expenses such as rent and daily necessities are covered by the fixed monthly income, statutory or company pension schemes. A comfortable nest egg – for example for extraordinary health expenses – should also be quickly available in the current account or the overnight money account. At least four to six retirement months should be planned for this.
Further assets that go beyond the nest egg and remain in the current account or the overnight money account inevitably lose their value. This is where a broadly diversified and inexpensive ETF portfolio comes into play.
If you invest in an ETF custody account, you either have the option of investing a certain amount in one fell swoop or a monthly sum in an ETF savings plan. From a risk perspective, we recommend dividing the capital available for an investment into partial amounts and investing it in stages, e.g. via a securities savings plan. In this way, you avoid investing all your money at high prices and buy at average prices instead. If you do not plan to touch this money, you can run your system first and simply let the money “work” for you.
Alternatively, you can also plan a monthly payment from your ETF portfolio in order to supplement your monthly pension. You can think of a so-called ETF payment plan like a kind of standing order that your bank sets up for you: You give the bank the task of selling securities for a certain amount every month and crediting the proceeds to your account. You have to calculate in such a way that the capital will last until the end of your life. Since an average capital growth of 7% is not uncommon, the assumption of 4% is a good guideline for your calculation. Additionally, assume that you belong to the ten percent of your age group that will get the oldest (95 years). Further regular cash inflows can occur through the distribution of dividends.
But even if you invest your assets in an ETF custody account without making regular payments, there is one way you can benefit from positive developments in the market while minimizing the residual risk: If there are good developments in the capital market, you can skim off your return and Sell ETF shares. You can use the money you redeem in this way to refill your call money account. In the event of bad years on the stock market, you can refrain from withdrawing money from your custody account and then use reserves from this overnight money account if necessary, without replenishing it using the ETFs.
Another advantage of securities accounts compared to other products: In the event of death, this will be counted towards the genetic material and passed on to the bereaved. Thus, the offspring also benefit from a profitable investment in retirement age.
If you have any questions about which product is suitable for you, please contact the advice of your house bank.
–
