Inflation protection without interest – 4 tips to keep in mind

Real assets should form the foundation of your investments

We have already reported many times about the zero interest rate strategy of the central banks and many of our customers are concerned that their savings will no longer generate any returns. With the Corona crisis and the economic recovery that is now beginning, there is a significant surge in inflation, which is intensifying the dilemma for conservative investors in particular. This makes monetary assets even less attractive as an investment. Because a fixed-income security only pays back the nominal value of the bond at the end of its term, and after many years it has lost a lot of purchasing power. At this point, we are therefore renewing our recommendation to weight real assets (stocks, real estate, corporate investments and gold) higher in the investment strategies, even if these are of course always subject to fluctuations in value.

Read here what tips we can give you about investments in real assets:

  1. Our tips for real estate investments as capital investments
    The falling interest rates have caused real estate prices to rise significantly in recent years. Even if interest rates will remain very low for a very long time: The scope for lowering interest rates has now been used up for mortgage lending, so that for this reason there is no longer any potential for price increases for real estate. Although rents have risen very significantly in recent years, real estate prices have galloped far ahead of rents in many cities. In the current environment, the potential for rent increases has its limits: Even before Corona, the political pressure (rent brake, rent cap) on the landlords of residential real estate rose, now after the federal election and the vote of the Berlin citizens to expropriate the housing companies, this pressure may increase again. Our tip: Only properties that are still interesting for new investments that already show an acceptable rental yield. Given the work involved in real estate management and the risks of tenant loss and repairs, buying a property as an investment must be carefully considered.
    In terms of risk diversification, despite these concerns, real estate continues to have its place in a well-established overall asset structure. Often this is already the case with owner-occupied property. But real estate can still be interesting as a capital investment. This is especially true if the rental return after all costs is still well above the mortgage interest and the location and the location of the property are sustainable. In these cases, a financing strategy with a manageable amount of equity can still generate an attractive return, especially for investors under 50.
  2. Our tip for equity investments
    Although share prices have risen sharply in the last 12 months, we consider shares to be the most promising asset class in the future: While there are not even fixed interest rates for bonds from deficit countries, company profits are often gushing more than ever. These profits either generate dividends or increase the value of the company, which benefits every shareholder.
    Our tip: Build up your equity capital in a broadly diversified manner and pay attention to the future topics of technology, ecology and health.
    In doing so, we consider it increasingly important to keep an eye on the risks that result from unsustainable management for the respective company. However, “dark green deposits” with low risk and high returns will remain a distant dream in the future: In the conflict between their financial and ethical needs, investors will continue to be forced to compromise.
    Therefore, the selection decision for stocks is complex and, above all, not trivial with a view to the point of entry and the control of fluctuations.
  3. Our tip for entrepreneurial investments
    Many consultants with high ecological standards prefer entrepreneurial investments in order to implement ambitious ecological goals. For female investors, however, this field is much more difficult to keep track of. It is not without good reason that one speaks of the “gray capital market” here because the legislature only partially succeeds in regulating the offers in this area transparently. In contrast to a broadly diversified equity portfolio, a total loss is not uncommon with such investments.
    Our tip: Since the minimum investment sums for entrepreneurial investments for female investors are usually 10,000 or higher, from our point of view these investments are really only worth considering for larger assets, where the loss of a single investment of this magnitude is really bearable and wherever there is a willingness to deal more intensively with his investment.
  4. Our tip about gold
    Physical gold is the easiest of all precious metals to acquire and store. In contrast to silver, the storage costs are still comparatively cheap due to a better ratio of value and weight. Compared to platinum or other metals, gold also has the most standardized trading options via coins, certificates or managed depots. As a currency in crisis, gold always has a legitimate share in a well-diversified investment portfolio. However, this is not the only reason to invest: Regardless of the assessment of whether a system collapse is just around the corner or not: Gold has served as a store of value with protection against inflation for thousands of years. The current combination of low interest rates and concerns about inflation is the ideal breeding ground for gold appreciation. Our tip: In the current environment, we consider adding gold to be sensible. We recommend a managed depot with physical storage in order to keep these values ​​safe and inexpensive. The level of weighting and the time of entry are just as worthy of a consultation as are questions about the type of investment and storage.
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A specific investment recommendation is not possible without knowledge of your personal needs and requirements, but these basic considerations may already help you to do something to protect your investments against inflation and to make your financial decisions actively. We are happy to support you and invite you to call up our knowledge.

Our events on this topic:

Webinar + face-to-face event //
Shares or real estate as an investment? An inflation protection workshop

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