If you put the same 100 euros on a savings account in the year 2000 it would only be worth 80 euros. The figures come from a new book “Investing in the Second Half of Your Life” (Investeren in de tweede helft van je leven) by VRT’s financial expert Michaël Van Droogenbroeck and Knack colleague Ewald Pironet.
Low interest rates are largely to blame for the drop is the value of savings. The European Central Bank reduced its rate to 0% in 2008 after the financial crisis in order to discourage saving, get us all spending and boost the economy. The present corona crisis means there is little prospect savers will get better deal soon.
Belgium operates a 0,11% legal minimum interest rate for most savings accounts, while inflation stood at 2% in recent years.
Despite this loss in spending power savings accounts remain by a long shot Belgians’ favourite port of call for cash that is not immediately needed. In 2000 100 billion euros was deposited on Belgian savings accounts. Today the figure is 300 billion.
Alternatives like shares, bonds and even gold have, in the main, provided far better yields, but these are riskier investments. As a result many loyal savers keep them at arm’s length.
However, there is more. Research shows how lacking is our knowledge of financial matters. Many people automatically put the cash they don’t need immediately on a savings account without considering the alternatives. “Investing in the Second Half of Your Life” that is published in Dutch provides an overview of the risks and advantages of all forms of investments. The authors argue that greater financial knowledge should be a priority for education. In that way their book would not be needed.