The golden times in which savers could see their wealth increasing significantly are long gone and will remain so in the long term. Whereas in 1990, for example, you needed just under 12 years to double your savings balance with annual interest rates of 7 to 8 per cent, the corresponding time period would now be around 400 years. Savings deposits offer a high level of security on the one hand. However, since inflation is higher than the interest rate, savings are worth less and less. This means that savings deposits are losing their purchasing power.
Christian Noisternig, Area Head Private Customers, Small Business and Independent Professions at UniCredit Bank Austria, therefore emphasised the following in regard to World Savings Day: “In order to beat inflation, we recommend in the current low-interest environment investments with more risk than traditional saving, for example our “WertpapierSparen” which offers attractive yield opportunities. “WertpapierSparen” is the ideal way to also invest small amounts in funds and is primarily characterised by its flexibility. Bank Austria offers a wide range of funds with “WertpapierSparen”. For example, bond funds, share funds or mixed funds can be purchased from just 40 euros a month. The advisers put together for every customer an investment portfolio corresponding to their risk profile. However, fund-linked investment is also possible as part of the “ERGO For Life” insurance policy which can be used to create flexible protection as a basis for a supplementary pension in future.”
Saving with investment funds
Investment funds are a simple, transparent and very flexible way to use the opportunities on international financial markets. UniCredit Bank Austria recommends the widest possible spread in this case as well as active management by experts who quickly reassign assets to the most attractive areas in order to achieve optimum results.
Together with its fund partner Amundi UniCredit Bank Austria offers, for example, the Komfort Invest Funds. This investment opportunity enables customers to regularly invest 40 euros a month, freely adapt the investment amount at any time, change the investment period in a flexible way and access the capital if necessary. The Komfort Invest Funds invest – depending on the selected risk model – in bond funds, share funds or a mixture of both categories. Different models are available depending on the investment horizon, the willingness to take risks, the investment objective and yield expectation of the customers.
Fund-linked investment in the form of an insurance policy
Another alternative is saving in the form of an insurance policy. ERGO For Life1 combines a classic investment form or a fund-linked investment form. At the end of the term, the credit balance is paid out as a one-off capital sum free of income tax or as a private supplementary pension.
With ERGO For Life, customers do not need to specify one investment form for years. That’s because two investment forms can be combined with one another and recombined at any time. Traditionally stable or fund-linked with greater yield opportunities. All mixtures are possible from a 100 per cent traditional investment up to 100 per cent fund-linked investment (always in 10 per cent steps). The allocation ratio can be individually designed and reallocated or changed free of charge on the last day of every month. One important asset is flexible life assurance as a basis for a supplementary pension in future.
Savings for children
UniCredit Bank Austria offers children the 24h Savings Account. For credit balances up to €1,000 there are starting interest rates of 3 per cent p.a. in the first six months2. The Kids Savings Card is designed to help children learn about the responsibility of dealing with money. The Savings Card is available for all children up to the age of 14 in different designs – with the clever foxes as a Fix&Foxi treasure card plus a Fix & Foxi DVD as a gift, as a colourful Savings Card or, as from now, entirely new with the brand ambassador Dominic Thiem.
Background to the low-interest environment
Because savings interest rates are below the rate of inflation in the long term, investors only have the alternative of switching to higher-yield investment classes, but also investment classes with more risk in order to maintain the purchasing power of their capital.
Stefan Bruckbauer, Chief Economist of UniCredit Bank Austria, analyses this: “Over the last 5 years an annual real yield of around €2 billion for securities was set against an annual real loss for savings of around €2 billion in Austria. Even after taking account of the financial crisis, i.e. the last ten years, an annual real yield of €300 million for securities is set against a real loss of €1.8 billion for savings deposits.”
As things stand at present, this negative balance for savings deposits will be exacerbated even more in the next few years. For example, the loss with savings deposits will actually increase to more than €4.5 billion in 2017 while securities could produce a real profit of around €2 billion this year.
Stefan Bruckbauer's conclusion: “Austrian households still hold around half of their financial assets in savings and only one quarter in securities. If Austrian households had an inverse ratio of savings and securities (i.e. one quarter in savings and half in securities) in 2017, they could avoid a real loss.”
Enquiries: UniCredit Bank Austria Media Relations
Matthias Raftl, Tel. +43 (0) 50505 – 52809
1 ERGO For Life is a product of ERGO Versicherung Aktiengesellschaft. As a contractually tied insurance agent of ERGO Versicherung Aktiengesellschaft, ERGO Center, Businesspark Marximum/Objekt 3, Modecenterstrasse 17, 1110 Vienna, UniCredit Bank Austria AG is involved in insurance broking as an ancillary business in the following areas: life assurance, accident insurance, property and liability insurance for the products household and home owners' insurance, and motor vehicle liability and collision damage insurance. UniCredit Bank Austria AG is authorised to receive premiums and certain payments from the customer. GISA No. 27506127.
2 The starting interest rates for the 24h Savings Account are adapted to the Interbank interest rate “1 month EURIBOR” for a period of 6 months every quarter on 1 January, 1 April, 1 July and 1 October. After 6 months the fixed interest rate is 0.05% p.a. Taxes are not yet taken into account.