The trend seems unstoppable: the financial assets of private households in Germany continued to grow in 2024 – for the fifth quarter in a row. According to the Bundesbank, they totalled 9,050 billion euros at the end of the year, an increase of 136 billion compared to the previous quarter. In the fourth quarter of 2024, private households shifted their money from longer-term, higher-interest deposits to very liquid short-term deposits. According to the Bundesbank, there was a strong increase of 40 billion euros in funds. However, a significant proportion of this (21 billion euros) was due to the purchase of money market fund units.

A look back shows how much the picture has changed within a year. According to the Bundesbank, financial assets had grown by 250 billion euros in the final quarter of 2023 – a record increase, driven primarily by valuation growth. It was the first period in two years with slightly positive inflation adjusted growth. Since then, however, the environment has changed: Economic uncertainty has returned, and with it the caution of many households.

However, these figures conceal a development that does not only merit optimism. The Bundesbank notes that real returns vary along the wealth distribution. The inflation-adjusted return reflects the actual return realised by private households. A closer look reveals an increasingly uneven distribution, and declining real returns for broad sections of the population.

Since the beginning of 2024, the Bundesbank has been making the so-called Distributional Wealth Accounts (DWA) data available for the first time. It sheds light on the extent to which assets and their returns differ depending on the household group. The key finding: the greater the net wealth, the higher the real return – in other words, the actual inflation-adjusted return.

While households with fewer assets predominantly hold their capital in low-risk but low-return forms such as deposits or insurance claims, the top 10% benefit from price gains on the capital markets. Equities and investment funds in particular generated significant valuation gains in 2024 – totalling 40 billion euros. However, a significant proportion of this was attributable to wealthy households whose portfolios are broadly diversified and opportunity-orientated.

This uneven distribution has a noticeable effect on the average real return: Across all households, it was just under 2% in the fourth quarter of 2024. However, those who mainly relied on traditional forms of saving once again suffered real losses. The once attractive fixed-term deposit offers lost their appeal with the fall in key interest rates. Many households reacted by reallocating their assets in the short term: 65 billion euros flowed into cash and demand deposits, a reminder of economic uncertainties and liquidity needs.

The liabilities of private households rose by 5 billion euros to 2,136 billion euros. As a result, net financial assets increased to 6,913 billion euros – although the inflation-adjusted level is below the 2022 figure. Despite the nominal growth, real purchasing power therefore remains limited.