Investment Instruments: How to Get High Yield in Europe

Investors often compare real estate in Europe with other profitable instruments – government bonds and bank deposits.

Government bonds are one of the main instruments of saving funds for wealthy investors. Such assets bring 0.5–3.0% per annum, do not require maintenance, are a liquid investment tool and are suitable for long-term investments.

Bonds are competing property for rent. Such objects in Europe give a comparable income of 3–6% per annum and grow in price every year. For example, the cost per square meter in Berlin from 2011 to 2016 has already increased more than twice. But at the same time, real estate is less liquid and requires the participation of the investor in the management of the object (or hiring a management company).

Bank deposits bring low returns (up to 1.5%) and are only suitable for capital preservation.

A tool that allows not only to preserve, but also to increase the capital of the investor – value added projects. The essence of the strategy is to buy a plot or an object that is below the market value, build or repair it and then sell it at a higher price. Such a tool brings investors 10-15% per annum on invested capital. Tranio’s value-added projects in Germany are aimed at capital owners ranging from 300 thousand to 5 million euros. The projected return for investors is 10–12% per annum after deducting all expenses and taxes, and the implementation period is 6–18 months.

Read more about Tranio value added projects.

For comparison: if an investor invests 400 thousand euros in each of the four considered instruments, then in a year he can earn up to 6 thousand euros on bank deposits, up to 12 thousand on government bonds, up to 24 thousand on rent. on the project of added value – up to 60 thousand euros.

Maximum income (euro) on invested capital per year with own investments of 400 thousand euros

Data: Financial Times, TheBanks.eu, Tranio
Tranio recommends diversifying investments: 70% of the capital should be stored in a safe, secure asset, for example, in high-quality foreign real estate or bonds of high-quality issuers, and the remaining 30% should be invested in a well-thought-out high-value-added value-added strategy. Thus, the overall risks of capital loss will be relatively low, and the profitability will be high.