This question is completely understandable and more important than ever in uncertain times like these. Since 2008, global debt has tripled from $ 100 to $ 300 trillion. For this reason, the world’s central banks are currently taking our entire financial system to absurdity.
They flood “the markets” with money for free. The misconception behind it: debts could be paid with more and more debts. The result: if you do not go shopping on dispo, then you get money almost without interest borrowed. States and corporations pay for their bonds on paper interest rates. In the bond market, however, they are currently de facto often having to pay money if they want to lend their money.
The countries of Southern Europe have – and are – able to make a sensational debt despite record unemployment, record debt, and comparatively weak economic performance. In the meantime, some states of Northern Europe and a number of debt-making companies are now making money. As a small saver you get from your bank at best, mini rates below the inflation rate. Those who park large sums of money in a bank account will, on the other hand, be asked to pay in many cases today.
The true crisis is yet to come
This historically unique central bank experiment of a gigantic money flood for free will have disastrous consequences for savers, investors, and citizens. For the past ten years, the global economy and world financial system have not really come out of the crisis.
Worse, the next big crisis will come. In comparison with it, the “financial crisis” of 2008 will be like a light summer storm. And we will all have to pay for the consequences of the gigantic mismanagement. The question is not whether you lose as an investor. The question is only when – and how much.
The most popular investments
Most citizens have their pensions and assets on just two legs spread. One pillar is traditionally regarded as a model of solidity: the self-used property, whether as a cottage in the countryside or as an apartment in the city. “My home is my castle,” says the English.
The ravages of time may gnaw on the property as on all human work, but if you keep them in good shape, then their value is considered secure. The belief in land ownership is almost as strong in most people as the belief that the sun will rise again tomorrow.
Unfortunately, many overlook two huge risks. On the one hand, the risk that property is often financed by loans – so our debt money system may also gnaw at the foundation of your stone refuge. On the other hand, many Americans and Spaniards had to learn painfully in the past crisis years, the property can also mutate from real value to monetary value. In other words, it has become a speculative object whose book value can be as shaky as that of other investments.
The other mainstay of the classical asset allocation is based on paper instead of concrete: life insurance policies, private pension insurance, Riester or Rürup pensions, maybe even a home saving and a few “federal treasure”.
We humans stand and walk only on two legs. But there is not a single reasonable reason to use this recipe for your asset allocation. Here is the magic word “Diversification”.
The more legs your financial reserves are, the better.