Accumulation of wealth is more often attributed to innovative saving strategies.
In a recent analysis, Professor Oscar A. Stolper from Philipps-Universität Marburg examined the financial wealth and savings behavior of Germans on behalf of Union Investment. The study reveals a significant impact of zero-interest traps on purchasing power loss for savers in Germany.
The zero-interest trap in Germany grew in 2020, reaching around 40 percent or 2.8 trillion euros. This is a considerable increase compared to previous years, as nearly 2 trillion euros in Germany are parked in checking or savings accounts, an increase of over 229 billion euros from 2019.
The real yield (difference between nominal interest and inflation rate) of sight deposits in Germany has been almost consistently negative for the past 20 years. With inflation rising again, savers in Germany could significantly impact purchasing power loss. In early 2025, inflation in Germany was around 2.1%, while interest rates were relatively low, leading to negative real interest rates that reduce savers’ purchasing power.
The European Central Bank’s monetary policy involved aggressive rate hikes in 2022-2023 but has recently begun rate cuts, maintaining a low-interest environment that perpetuates the zero-interest trap for savers. This dynamic has contributed to higher precautionary savings as households try to protect wealth, even though real returns remain negative.
In 2020, the share of stock investments in Germans' total financial wealth rose by 0.7 percentage points to 11.6 percent, the highest value in over twelve years. However, the share of time and savings deposits in total financial wealth fell slightly by one percentage point to 11.7 percent from 2019 to 2020.
The savings rate in Germany rose from 10.9 percent in 2019 to 16.2 percent in 2020 due to lockdowns and financial uncertainty. This tendency towards increased precautionary saving is a reflection of concerns about low returns on savings, hence more focus on holding cash or liquid assets despite inflationary pressures.
In the zero-interest era, only savings contribute to wealth growth, as the share of income in wealth growth fell by another 5 percentage points to a meager 19 percent in 2020, compared to 2019. This means that savers in Germany lost about 79 billion euros in purchasing power with their sight deposits in 2020.
For instance, someone who invests 10,000 euros at an inflation rate of 2 percent and an interest rate of 0 percent in Germany would lose approximately 1,797 euros in purchasing power over ten years.
In conclusion, German savers face purchasing power losses due to near-zero interest rates failing to keep pace with inflation. This dynamic has contributed to higher precautionary savings as households try to protect wealth, even though real returns remain negative. It is crucial for savers to be aware of this situation and consider alternative investment strategies to safeguard their purchasing power.
Personal finance decisions in this zero-interest era necessitate a shift towards alternatives, as the majority of savings in Germany (nearly 2 trillion euros) parked in checking or savings accounts continue to face purchasing power loss due to inflation. With wealth-management strategies becoming increasingly important, it's advisable for individuals to explore other investment opportunities, such as stock investments, to mitigate the impact of negative real interest rates on their personal-finance accounts.
