Returns in the Altersvorsorgedepot: what is realistically achievable
The return is the percentage earnings of an investment per year. In the Altersvorsorgedepot it depends heavily on the variant you choose: equity ETFs deliver 6 to 8% over the long term, guarantee products 1 to 4%. Over 30 years the difference adds up to 50% or more in final balance.
What is the return?
Return is the ratio of earnings to capital invested, expressed as a percentage per period. In retirement provision it is usually stated as an annual return (p.a., per annum).
If you invest €1,000 and have €1,060 after one year, you have generated a return of 6%. Over long periods, compound interest effect takes the leading role; what then counts is no longer the individual annual gain but the average return.
Gross and net return, the decisive difference
Advertising and model calculations usually quote the gross return, which is pure market performance. What actually reaches the saver in the end is the net return:
| Figure | Value | Example |
|---|---|---|
| Gross return | e.g. 7% p.a. | MSCI World, historical |
| − Reduction in yield | −0.3 to −1.8% | depending on the provider |
| = pre-tax net return | 5.2 to 6.7% | what ends up in the securities account |
| − Inflation | −2% long-term average | loss of purchasing power |
| = real return | 3.2 to 4.7% | genuine growth in wealth |
With deferred taxation in retirement, tax is added on top (see Deferred taxation). Despite all deductions, the Altersvorsorgedepot still delivers a better return than a savings book or an instant-access savings account.
Which return is realistic in the AVD?
ETF returns have historically been 6 to 8% p.a., and that is also the realistic expectation in the AVD.
Historical returns compared
| Type of investment | Ø gross return p.a. | Fluctuation |
|---|---|---|
| MSCI World (equity ETF) | ~ 7.5% | −40% to +40% per year |
| FTSE All-World | ~ 7% | similar to MSCI World |
| Government bonds DE/EU | ~ 2% | low |
| Mixed funds 60/40 | ~ 4.5% | moderate |
| Instant-access savings (average since 2010) | ~ 0.7% | none |
| Inflation Germany | ~ 2% | not directly comparable |
Sources: MSCI, Deutsche Bundesbank, Federal Statistical Office. Figures rounded, long-term averages over 30 years.
Return expectation by AVD variant
| Variant | Expected return p.a. | Example final balance after 30 yrs* |
|---|---|---|
| Pure equity ETF (0% guarantee) | 6 to 8% | ~ €100,000 |
| 80% contribution guarantee | 3 to 5% | ~ €65,000 |
| 100% contribution guarantee | 1 to 3% | ~ €45,000 |
| Default standard product (passive ETFs, low costs) | 5 to 7% | ~ €85,000 |
*Assumption: €100 own contribution per month plus €540 basic allowance per year.
The choice of variant is the biggest lever for the return. Anyone with 20+ years ahead of them should critically question the contribution guarantee ; on average it costs €1,000 to €1,500 in return per year of investment.
Return and risk belong together
A higher expected return always means a higher short-term fluctuation risk too. Equity markets can lose 30 to 50% in a crisis. Over long periods, however, every period of 15+ years has shown a positive real return (MSCI World, since the index began in 1970).
If you are shortly before the start of retirement, you should gradually shift into safe investments. For this, many providers offer a lifecycle model (glidepath) that automatically reduces the equity share as you get older.
Frequently asked questions about returns
What return does my provider promise?
Providers may only present returns as a historical model calculation, never as a promise. Look for the note “historical performance” and the assumptions on which it is based.
Is a 6% return realistic?
With a broadly diversified equity ETF over the long term, yes. Over short periods the return can be far below (or above) that.
What happens in a long market slump?
Even after the worst 20-year periods (e.g. Japan 1989 to 2009), a globally diversified portfolio has produced slightly positive earnings. A home-biased portfolio, by contrast, can stay in the red for a long time.
How much do costs affect the return?
Strongly. One percent more in reduction in yield cuts the final balance after 30 years by 20 to 30%. Details at Reduction in yield.
Do the allowances earn returns too?
Yes. The basic allowance and child allowance are credited directly to the securities account and earn returns from that point on.
How does inflation affect this?
It reduces the purchasing power of the final balance. At 2% inflation, €100,000 in 30 years corresponds to only about €55,000 of today’s purchasing power. That is why you need returns above the inflation rate.
What counts for me in the end?
The net return after costs and inflation is the decisive figure. Many advertising brochures calculate this too optimistically.
Keep calculating and reading
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