Germans accumulated record wealth last year, despite high inflation. Above all, the price increases in the stock markets and the increase in savings interest rates caused household financial assets to increase to about 7,716 million euros by the end of 2023.
The total rose 3.3 percent compared to the third quarter, the German Bundesbank reported Thursday. In one year there was an increase of 6.6 percent.
In its assessment, the Bundesbank takes into account cash and bank deposits, securities such as shares and funds, as well as claims against insurance companies, but not real estate. These data do not clarify how the gigantic sum is distributed.
Wealth inequality in Germany has increased slightly again since 2022
According to a study recently published by the central bank, wealth inequality in Germany has increased slightly again since 2022. This is due, among other things, to the different composition of assets. Wealthier households own more securities, such as stocks or mutual fund shares, as well as real estate and business assets. Consequently, you will benefit from price increases in the stock markets. Only the leading German index DAX rose by a good 20 percent last year.
According to the data, the net assets (that is, assets minus debts) of the poorest households consist mainly of bank deposits, as well as life insurance and other private pension products. Less wealthy people also dipped into some of their savings due to rising inflation, which averaged 5.9 percent in 2023, the second highest since reunification. Studies show that higher inflation rates especially affect people with lower incomes because they have to spend a greater proportion of their monthly income on energy and food.
In the fourth quarter, the Bundesbank estimated capital gains on listed shares, shares in investment funds, as well as insurance and pension rights and bonds at a total of 184 billion euros.
Reorganized savers
According to the figures, the majority of financial assets continue to be in cash and deposits in banks and savings banks, such as demand and fixed-term deposits. This item amounted to 3,214 million euros at the end of 2023 and has increased again. However, as interest rates rose, savers changed their investments. They reduced their so-called demand deposits by 19 billion euros, which generally include non-interest-bearing current accounts and demand deposits, which yield comparatively little. At the same time, longer-term, higher-interest deposits such as fixed-term deposits or savings bonds grew in popularity.
According to the information, the real total return on financial assets of private households, that is, the return actually obtained after deducting inflation, returned to being slightly positive for the first time at the end of the year after eight negative quarters.
Minus debts, households' net financial assets increased in the fourth quarter by €244 billion, to €5.56 billion, compared to the previous quarter.
Christian Röhl, author of the study: “This is the third consecutive dividend record”
Many shareholders not only benefit from price gains, but also from dividend payments. With an estimated €62.5 billion, the distribution volume of the 160 companies in the DAX family is 1.6 percent higher this year than the previous year, according to calculations by the German Association for the Protection of Asset Holdings. Securities (DSW) in collaboration with the Surge Institute, the Department of Strategic Finance of the FOM University. “This is the third consecutive dividend record,” study author Christian Röhl said recently.
The unexpected gains are especially strong in the main German stock market league. According to calculations by the consulting firm EY, the 40 DAX companies paid a record sum of 53.8 billion (plus 2.4 percent) in the last year. 24 companies pay a higher dividend than the previous year, but in five companies the shareholders are left empty-handed. Dividends for the previous year are paid after the general meeting.