People’s savings are losing their value. The interest rate is so low that it does not come close to compensating for price increases. Savers are losing a combined total of almost 3.5 billion euros in purchasing power this year alone.
Figures from the Dutch central bank show that Dutch people have put away a total of 415 billion euros in savings this year. The average interest rate on savings account was 0.57 percent, whereas the price increase came to 1.4 percent. That means savers are losing billions in purchasing power.
The purchasing power for these savers will only deteriorate for the foreseeable future. The savings interest rate is likely to remain low for the time being, as the European central bank is showing no signs that it will increase the official interest rate. Critics fear that consumers and investors will start taking more and more risks in order to get better returns.
Saving or investing?
People with a savings account of up to about 20,000 euros basically have nowhere to go. They cannot take the risk of investing and are basically forced to accept the low interest rate. However, thanks to a tax allowance of a little over 20,000 euros per person, they do not have to pay the 1.2-percent wealth tax.
Savers with more money could consider investing some of their money. It is important that they are able to go without this sum in order to weather a stock market decline.