Wealth planning and asset accumulation

Depending on the life phase and the investment horizon, different basic strategies for asset accumulation are necessary. Anyone with a long-term horizon can take higher risks. Higher risks offer higher returns. And if an investment does not work out well, there is enough time in the long-term approach to make up for those losses. A shorter investment horizon is often about wealth preservation. Or at least about inflation protection.

Monetary assets (deposits with banks or insurance companies) lose purchasing power at the rate of inflation each year. With an average of 2%, financial assets thus lose around 20% in purchasing power in 10 years. Incidentally, this also applies to loans. A claim that a bank has on you, at 2% inflation is only 80% of the original equivalent in 10 years – even without repayment. Smart saving means investing in inflation-protected assets.