German economic crisis: What should I do with my savings?

Christine Lagarde watches over key interest rates. In recent years, the President of the European Central Bank has been primarily concerned with stopping the rise in prices with high key interest rates – and managed to do so. In November the inflation rate in Germany was only 2.2 percent. This is almost the ideal of 2 percent.

Lagarde was therefore able to lower interest rates again on Thursday: from 3.25 to a straight 3 percent. This should also help the shrinking economy and weakening companies in Germany. Loans become cheaper and you can invest again.

For savers and investors, however, this means: There will soon be less interest on call money, fixed-term deposits, etc. The stock markets could also become more restless. Who needs action?

Leaving money in your current account wasn’t a bad deal recently. Interest rates rose, the return prospects were rather positive, the savings did not lose value and were not exposed to the fluctuations of the financial markets.

Now interest rates will probably fall soon, which makes “parking” assets in savings accounts and in current or fixed-term deposits less sensible. If you only understand Spanish, money that is in a current account earns higher interest than in a normal bank account. You can still use this very flexibly. Daily money ends up in your bank account via a simple transfer.

With a fixed-term deposit, the saver commits himself for a longer period of time. Periods of 3, 6, 12, 24 or 36 months are common, during which a fixed amount is invested at a fixed interest rate. During this time you can’t actually use the money. However, the interest rates are generally higher than with overnight money. The longer the period, the higher the interest.

So which option makes sense in the current situation? The signs for the German economy are currently pointing to a downturn. . The election of Donald Trump as the next US President could also cause further damage to the European economy. Trump is already threatening Europe with punitive tariffs.

In such a situation you should be more careful. In concrete terms, this means: Build up reserves rather than making large purchases. You should save at least three months’ salary. This also protects against a sudden loss of income. In uncertain times, it may also be worth expanding the reserve a little to five to six months’ salary.

Also: Do ​​not put any money you have left over into fixed-term deposit contracts that run for longer than a year. In fact, the difference in interest rates for call money and fixed-term deposits is currently quite small. You can still get interest rates of over 3 percent even with shorter investment periods.

Many banks also entice you with offers that promise interest rates above market levels. Switching to a reputable provider can actually be worthwhile, but it is only a one-off effect if you don’t want to sign a new contract every six months.

Bottom line: keep calm. Due to the low inflation rate and the currently higher interest rates, your savings are no longer at risk of turbo-devaluation.

When investing in stocks, funds and ETFs, things are more complicated. Despite the general feeling that the German economy is in shambles, the most important German stock index, the Dax, reached a new record last week. Since October alone it has risen by almost 15 percent. Drivers for the optimistic mood on the stock markets: Many German companies do their business in the USA, where the economy is doing well, and falling interest rates could also stimulate the German economy.

So can investors simply put their feet up and watch their own stock assets grow? Of course it’s not that simple. The biggest uncertainty factor at the moment is probably Donald Trump’s economic policy. If business on the American markets becomes tougher for European companies, this could lead to poor numbers in the quarterly reports in 2025. And thus also for falling share prices.

However, an assessment for individual stocks or sectors is difficult. As with daily and fixed-term deposits, the following applies: keep a cool head. It is not advisable to panic sell European stocks or funds and exchange them for American ones.

Stay true to your investment strategy and perhaps look at your portfolio even less often than usual. Investing long-term and regularly, ideally in broadly diversified ETFs, still makes sense.

Anyone who invests in gold or the like currently feels more secure: Precious metals are supposed to have particularly stable value, especially in times of crisis. However, it is difficult to say how the development of the global economy will affect the price of gold.

One thing is certain: 2024 will go down in the history of the yellow precious metal as a “golden year”. According to initial evaluations, gold has so far delivered a return of almost 28 percent. Things could look even better at the end of the year. “Anyone who has entered at the end of November over the past seven years and sold on the first trading day of the new year has always been successful,” says Jürgen Molnar from the broker RoboMarkets, for example, who analyzed the development of gold at the end of the year.

The Trump uncertainty factor could also have a positive impact on the gold price in the medium term. Geopolitical tensions and trade conflicts could also worsen further in 2025. Gold as a material asset guarantees a certain equivalent value, in contrast to Bitcoin, for example. So a purchase could be smart.

The Trump factor currently seems to be increasing interest in investing in cryptocurrencies. Fans of Bitcoin, Ethereum and Co. see him as “crypto-friendly”. Trump’s election has even directly influenced the price of the largest currency, Bitcoin: Since his victory in the US presidential election at the beginning of November, the price of the cryptocurrency has risen by more than 30,000 euros.

However, cryptocurrencies are not suitable as a safe investment that can be used to finance retirement, for example. In the past, investors have repeatedly experienced unpleasant surprises, sudden price drops and the total loss of their money.