When investing, it is worth comparing offers
Secondly: In the new world of interest, it is also worth comparing different fixed-term deposit offers. For example, if you already know today that you will need a new used car in two years and can set aside 20,000 euros for it, then you can currently get three percent interest on it. And this with banks from the EU area with good statutory deposit insurance in countries that have their deposit insurance under control, such as Austria, France or the Netherlands. The 20,000 euros would even become 21,200 euros in two years with twice 600 euros in interest. The comparison part is quite simple.
It becomes more complicated if you want to invest larger sums in a fixed-term deposit account and are wondering whether you would rather set your fixed-term deposit for one, two, three or four years. With each additional year you choose, the interest rates will increase slightly. However, it could of course be that the interest rates are much higher in a year’s time and it would be a smart idea to invest the 20,000 euros for one year at two percent interest and then for three years at four percent. The result would be almost 23,000 euros. If you were to invest the money now for four years at three percent, you would only get a good 22,500 euros. You have to make a bit of a bet with this consideration.
return on equity index funds
Third: In the long term, you should not rely solely on interest investments for a larger part of your assets. In the past 20 years, banks have rarely paid more interest than inflation. The bottom line is that you lose with such investments. Incidentally, this also applies to many life insurance products.
Even with 3 percent interest, you’re not doing well if your money is depreciating significantly every year. After five years, despite your successful hunt for interest, you can buy ten percent less of the money then in the account.
In the long term, you should therefore invest at least part of your money in the stock market. With an international equity index fund, you would have had an average return of seven to nine percent a year after 15 years over the past 40 years and you would have made no nominal losses in the long term, even in bad stock market phases. With such an investment, you would probably have beaten the currently high inflation year after year in the long term.
