Germany's wealth remains stagnant according to Bundesbank
In a recent report by the Bundesbank, it was revealed that Germans' collective wealth has reached a new record high of 9,053 billion euros at the end of the first quarter. Despite this growth, the preference for cash and low-risk investments among Germans remains strong.
The wealth gap persists, with around four million wealthy households owning half of the wealth, and the less wealthy holding less. Approximately half of the wealth is concentrated among the richest 10 percent, who tend to invest more in stocks and funds than poorer households. However, around 20 percent of financial assets are invested in stocks, while more than a third (37 percent) of gross financial assets are held in cash and sight deposits.
One of the primary reasons for the preference for low-risk investments can be attributed to historical factors. Germany experienced severe hyperinflation in the 1920s, which left a lasting impact on the collective memory and financial preferences of the population. This historical trauma has reinforced the German preference for monetary stability and fiscal discipline, making them more cautious with riskier investments like stocks.
Economic factors also play a significant role. Germany's economic history, including periods of high inflation, has made the public wary of investing in volatile markets. Recent fluctuations in inflation rates, such as the drop to 2.0% in June 2025, can influence investment decisions. Additionally, despite a gradual shift towards digital payments, cash remains a preferred method for many transactions, especially in certain sectors like restaurants and cafes.
Cultural factors also contribute to this preference. Germans often prioritize savings and financial security over speculative investments. There is a cultural inclination towards prudence and risk aversion, which typically leads to a preference for low-risk investments like fixed-term deposits or savings accounts. The banking system in Germany offers a range of low-risk savings options with transparent fees, which appeals to the risk-averse nature of many Germans.
The regulatory environment in Germany also supports financial stability and safeguards investments, which can encourage investing in lower-risk assets. However, this environment also means that more speculative investments might be less favored due to stricter regulations. There is a strong emphasis on financial education and literacy in Germany, which can influence investment choices. Many Germans might opt for low-risk investments due to a preference for understanding and controlling their financial assets directly.
The DZ Bank predicts growth to slow in 2025 and 2026, as high stock market gains are unlikely to be repeated. However, the wealthiest 10 percent of Germans benefited from stock market gains, while the less wealthy half kept almost all their financial assets in low-risk bank deposits and insurance claims. The shift from fixed-term deposits to short-term liquid deposits, such as demand deposits, is due to the European Central Bank's interest rate cuts.
Despite the record-breaking wealth, the preference for cash and low-risk investments among Germans remains a notable trend. Understanding the historical, economic, and cultural factors contributing to this preference can provide valuable insights for policymakers and investors alike.
Personal-finance decisions among Germans continue to prioritize monetary stability and low-risk investments. Approximately 37 percent of gross financial assets are held in cash and sight deposits, reflecting a historical, cultural, and economic preference for such investments.
