From an investors' perspective, German shareholders appear to have made a serious mistake: They are investing too much of their money in domestic stocks. This means that they give up potential profits of around 200 billion euros. This is clear from an estimate by the newspaper Handelsblatt, which analyzes the results since the turn of the millennium. Consequently, investors could have achieved significantly higher returns if they had spread their German investments more internationally.
The price rise on Wall Street is greater than on the German stock markets
According to the Handelsblatt, the world's largest financial market, Wall Street, proved especially lucrative. The US markets performed better in the long term than the German stock market.
For comparison: the Dax has risen 160 percent since the turn of the millennium, while the world's leading index The price of the iShares MSCI World ETF increased by 250 percent. The MSCI World is an international stock index that tracks the performance of around 1,500 companies from 23 countries.
Anyone who invests in it can make higher profits on average than investors who limit themselves to Germany. This shows the disadvantage of limiting yourself to the domestic stock market.
This error becomes even more evident if one takes into account that at the beginning of the new millennium the Germans had invested directly and indirectly through funds in German shares around 248 billion euros. According to the report, this illustrates the enormous potential that could have been realized through greater diversification of investments.
Investment professional Vorndran advises: “Invest money abroad for free”
To avoid similar losses in the future, experts advise investors to reconsider and rebalance their strategies. Philipp Vorndran, partner at the asset management company Flossbach von Storch, quotes the newspaper Handelsblatt: “My advice to German investors would be to invest almost all available funds in liquid assets abroad.”
Paul Jackson, a research expert at money manager Invesco in London, also emphasizes the need to rethink: “Gone are the days when you believed that, as a shareholder, you had to own iconic German companies.”
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