Driving wealth accumulation doesn't have to be extremely complicated. But many are uncomfortable with the topic, which is why they put it off. Not making these nine basic mistakes is half the battle.
Making provisions for the future is not always easy and the path is individual. A baker's apprentice simply has different options than a management consultant who has worked for many years. But many people make these mistakes - no matter how high their income is.
Mistake 1: Not recognizing the need
"Sometimes people don't do anything with their money because they are not aware of the need," says Constanze Hintze, an investment advisor from Munich. It is important, especially in times of ten percent inflation, to think about adequate retirement provisions. Andreas Bley from the Federal Association of German Volksbanken and Raiffeisenbanken sees it this way: "Many people are uncomfortable with the topic, which is why they put it off."
Mistake 2: Starting too late
Most investments take a long time to develop a good return. Anyone who wants to invest to build up a pension plan should be careful. Bley advises: "Don't wait until you're 50, but start building your assets right away when you start your career." Many people did not calculate how high their financial needs will be in old age and what their saved funds will actually be.
Simone Bußmann, an investment advisor from Ludwigsburg, says: "Many underestimate the compound interest effect." The effect means that interest is not only due on the money paid in, but also on the interest or income generated over time. Bussmann advises anyone who can, should set up a savings plan for their children in order to take full advantage of this effect. A savings plan with investment funds or ETFs can be set up for as little as EUR 25 per month.
Mistake 3: Don't plan
"Many proceed indiscriminately and end up with a patchwork," says Hintze. For example, some concluded a home savings contract without knowing whether they wanted to build and whether they could pay into it their employer’s capital-forming benefits. Hintze advises: "First, savers should take stock of what they have already done."
There is no one right plan for everyone, says Bußmann. A mixture of money market account, ETF, investment fund, maybe precious metals or your own four walls - a lot is possible. However, Bußmann and Bley advise caution when it comes to cryptocurrencies. If at all, these are only suitable for experts.
Mistake 4: Forgetting the nest egg
Some underestimate how much money they have to set aside for emergencies like a broken refrigerator or car repairs. "Before you start saving, you should first determine how much you have available for it," says Bussmann. A household book, regardless of whether it is paper or an app, makes sense for this.
The money that then flows into equity funds, for example, really has to be left over. "Many don't know how much they can save, find out after a few months that they've taken on too much and then quit everything," says the investment advisor. That costs a lot of money.
Mistake 5: Lack of courage
"Many people lack experience with products such as equity funds, so they are reluctant," says Bley. They therefore stuck to options that seemed safer to them, such as bank deposits. "They are very solid, but bring little yield," says Bley. Anyone who is unsure should seek advice.
Hintze also sees many people being reluctant to deal with investment products. It is still the case that if you want to build up a good old-age provision, you cannot avoid the stock market. "Interest rates are rising again, but they remain too low to achieve additional income after adjusting for inflation," says Constanze Hintze. Call money and time deposits alone are therefore not enough.
Mistake 6: Too little scattering
If you only rely on fixed deposits or only on a share account, you are doing badly. "Investors should diversify their funds so that they always have a part available, invest another part in the medium term and a third part in the long term with greater prospects of income," advises Hintze. It is also good to divide the funds in such a way that government subsidies and tax savings benefits can be taken with you, for example in the savings phase for one investment and during the payment for another.
"Don't put everything on one card," advises BVR expert Bley. This also applies to the choice of an individual system. An example: In order to spread a risk more widely, it makes more sense to invest in an equity fund than in the stock of a single company. And the funds also differ in their diversification: anyone who chooses a fund that is based on an international index spreads their risk more widely than with a fund that relies exclusively on the German stock index.
Mistake 7: Too much trading
"Constantly buying and selling is too expensive," says Bussmann. When selling at a profit, capital gains tax and, if necessary, church tax are due, as well as fees when buying ETFs and funds or selling shares. "Long-term thinking pays off," says Bussmann. For example, anyone who invests in an exchange-traded fund (ETF) should see it as a long-term investment, i.e. ten years or more.
Mistake 8: Never look again
Anyone who creates a share portfolio and has not taken care of it for decades is also wrong. "You have to maintain a stock portfolio and keep an eye on it," says Hintze. Sometimes industries go out of fashion. Then investors should switch if necessary. "The rotation of shifts depends on the respective depot and its orientation," says Hintze. Investors should check their portfolios at least once a year.
Mistake 9: Leave financial planning to the man
Constanze Hintze specializes in advising women. "Too long family phases, tax class 5 and long part-time work" are the classic mistakes that many women continue to make. The division of a good and a low-earning spouse into tax brackets 3 and 5 brings advantages for the overall income. But those who inherited the inferior class received a lower net income as a result. It's mostly the women.
"It does something to self-confidence," says Hintze. A woman now has to ask her husband for money in order to be able to save. She therefore recommends couples with very different incomes to choose "tax class 4 plus factor". Here the person with the lower income has to accept fewer deductions. At the same time, the tax burden has been adjusted in such a way that a substantial additional payment is unlikely.
