Kiel – In Germany much is inherited. But often the heirs do not know where to go with the money or where and how best to invest it. Because in many cases, the additional money is not needed or is not immediately used. Since interest rates on term money and overnight money accounts are currently very low, experts recommend investing most of the inherited money in funds.
Not every heir can count on a large sum. But even a legacy of 100,000 euros and more is not uncommon in Germany. Anyone who has inherited such a sum suddenly wonders: where to go with the unexpected fortune? “First of all, it’s about accepting the money internally,” says Ute Voß from Kiel, who works as an independent financial advisor and financial coach. “Many feel that they have not earned an inherited fortune.” Before she develops any proposals for the investment, Voss first looks at the specific case. So: What is the personal life situation – is it about a self-employed person or an employee, are there children or do you have to pay off debts? If the money is not needed in the next few years, for example, to pay off a real estate loan, it should be created. “For call money, there is only a meager 0.5 percent interest a year and they are also nibbled by inflation.”
Anyone who does nothing thus makes losses: “On the daily or fixed-term account, the assets are currently less,” says Prof. Max Otte of the University of Applied Sciences Worms. There, investors should only park money they need in the next five years. From a legacy of 200 000 euros, he would leave a maximum of a quarter on the time deposit account. “Half of the remainder would be invested in two global equity funds and two mixed funds.” A diversified portfolio also recommends the specialist book author Markus Neumann. “German stocks should not take up too much space in the portfolio.” A classic portfolio consists of stocks and bonds, plus some commodities and precious metals. “These are all liquid investments that you can sell again.” The key question is: how high should the share in the value of fluctuating investment forms be? In addition to equities, these include commodities and gold.
Equity Funds Vs. Classical stable investments
“Classic value-stable investments such as bonds have a very low interest rate,” explains Neumann, who has also written a book for Stiftung Warentest. As a return-maker, fluctuating values are therefore indispensable. The longer the investment horizon, the sooner the investor can take advantage of fluctuations. Therefore, it is crucial for the right mix, when the money is needed: “Who needs the money after ten years to 100 percent, should not put everything in shares.” After all, equity funds have generated an average annual return of 6 percent over the past five years. “The trick is to step in staggered,” explains Otte. He would pay 12,500 euros to each of the four funds every six months. After one and a half years, everything was laid out: “First of all you only go down to your knees into the water and not upside down.” Financial adviser Voß also encourages clients with an investment horizon of around seven years to invest in widely diversified funds. After all, hardly anyone has the time to look at each company themselves.
Funds promise a higher return
Mixed funds include not only shares but also other asset classes such as bonds or liquidity. This allows the fund manager to react to market developments. Otte advises against pure bond funds: “I would leave the decision on the loan portion in the portfolio to the professionals.” Instead, investors should rather different funds compete against each other. “Personally, I prefer managed funds,” says Voß. “I look at the personality of the fund manager and if he has a knack for it.” While mixed funds are always actively managed, equities also have unmanaged index funds. These so-called ETFs simply depict a stock index and therefore do not require a manager. Investors can handle such high fees: “Most managed funds do not fare better than the market,” says Neumann. The author would invest a larger sum in three to five index funds, each representing international stock indices such as the MSCI World.
Securities funds are the right choice for long-term investments. But where can investors buy the right funds? In principle, there are three possibilities for this: with the bank consultant, with an independent broker or on your own via an online depot. “Anyone who goes to the bank and buys two to three managed funds there does not always do anything wrong,” says Neumann. But the procedure is still far from optimal. “I recommend a deposit with a direct bank,” says the financial expert. “If you do not want to manage your investment yourself, you can leave that to a Robo-Advisor.” These financial service providers charge only a small fee and automatically weight the portfolio according to the customer’s ideas. “If you do not have a computer, you should ask your bank adviser specifically for ETFs.” Bank customers should insist on these products even if the consultant expresses reservations.