One of the few privileges my grandparents had that I didn’t is that they could keep their money in the same bank account for most of their lives without ever having to worry about it losing its value. Between 1955 and 1989, Germany always had real interest rates of 3-5%, meaning even after inflation, your money would grow a little bit every year.
Today, protecting your money is a much bigger feat — and the perfect bank account no longer exists. Trust me, I know. I have six of them.
One account with a neobank is for Four Minute Books. It’s fast and cheap for currency conversions, but verifying my identity, “proof of funds,” etc. is a nightmare. So I don’t want to hand them all my money.
Another account is for my writing activities. It’s smooth and easy to use, but it costs 10 euros per month, and I don’t get any interest whatsoever.
My personal account is with one of Germany’s oldest banks. It’s nice that they know me. I can call them with any problem, and they don’t fuss too much whenever I need to bump up my credit limit. Unfortunately, they’re terribly slow, often block and inquire about my transactions, and pay zero interest. Plus, their fees keep going up. They just raised them again — by 70%.
For every problem one account solves, it provides another challenge only a different bank handles well. It’s a never-ending circle, and so I keep opening and closing accounts, moving money around, and have to stay somewhat up to date on the developments with each bank. It’s hard work, and I’m not sure it’s always worth the hassle, but I’d rather pay too much attention to my money than too little.
Of course, what applies to banks applies to everything else in life, too. It’s a point well-made on a t-shirt Tim Ferriss saw someone wear while at a rock climbing gym: “No solutions, only tradeoffs.” For every plus, there’s a minus, and while you can swap ones and zeroes as much as you like, you’ll always end up with some wins and some losses.
Going back to my grandparents, while they might have enjoyed an average interest rate of 4% for more than half a century, the steady availability of those rates has turned Germany into an extremely risk-averse market for investors. Many people I know today still think stocks are dangerous and akin to gambling. Even ETFs “sound sketchy.” Historically, only around 10-15% of Germans even own any stocks at all — and that means entire generations, including my grandparents, have missed out on the massive growth in equities as compared to even very good interest rates.
No solutions, only tradeoffs. Pick your problems wisely, and don’t worry about perfection.