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In the second quarter of 2021, the net wealth of German private households experienced a significant boost, according to data from the German Federal Bank. This surge was primarily driven by a rise in cash savings, sight and time deposits, life and pension insurance, and fund investments.
The high household savings rate and cautious consumer behavior during and following the COVID-19 pandemic played a crucial role in this accumulation. Many households increased their cash savings and deposits as a precaution due to economic uncertainty and limited consumption opportunities during lockdowns.
The ongoing economic recovery and improved economic outlook also contributed to the wealth increase. Germany experienced gradual GDP growth and economic stabilization, which supported wealth accumulation.
The preference for secure financial products and long-term investments, such as life and pension insurance policies and funds, was another significant factor. Increasing investments in these instruments contributed to the rise in net wealth.
Moreover, low interest rates combined with cautious investment behavior led households to hold more sight and time deposits and to channel funds into safer investment vehicles. This boosted these asset categories.
It's important to note that this increase in wealth does not include debts, real estate, or business shares.
Experts from Franke-Media.net, operators of the Internet portal Tagesgeldvergleich.net, have analysed the data and predicted that the current rate of increase could see German wealth surpass the record mark of 7 trillion euros before the end of October.
However, it's worth mentioning that no specific report explicitly lists all factors for Q2 2021. These points summarize the general economic environment and household financial behavior driving the observed wealth increase in Germany at that time.
Additional data indicates that fixed-income securities decreased by 263 euros per second, equating to 23.65 billion euros per month. Money market fund assets also decreased by 8 euros per second. On the contrary, life and pension insurance added 2,760 euros per second, and fund investments contributed 1,410 euros per second to the wealth increase. Cash savings, sight, and time deposits contributed 4,061 euros per second to the wealth increase.
These insights offer a comprehensive understanding of the factors influencing the growth in German household wealth in Q2 2021, providing valuable context for financial analysts and the general public alike.
Investing in secure financial products like life and pension insurance and funds played a significant role in the boost of German private households' net wealth in Q2 2021, as many households increased their investments in these instruments. The cautious investment behavior, coupled with low interest rates, led to a rise in cash savings, sight, and time deposits, also contributing to the wealth increase in Germany during that period.
