Back in the 1920s, following the defeat of World War One, Germany went through radical changes. The empire was over but a new German republic rose from the ashes.
For a time, it looked like millions of middle-class families would quickly rebuild their lives. In no small part because Germans are such diligent savers. But the money they hoarded, before and during the war, soon became almost worthless.
The Treaty of Versaille put the nail in the coffin of Germany's chances of making a swift post-war recovery. A severe economic crisis struck and the Great Depression took hold. Hyperinflation then wiped out the wealth of most German savers who held the Reichsmark.
But luckily there was another cohort of German savers, who, having foreseen the trouble posed by the Treaty of Versaille, actively shifted their assets out of the country and into neutral countries like Switzerland. There they employed professional wealth managers to look after it for them.
So this small group of wealthy Germans not only correctly predicted financial meltdown, but due to expert asset management, actually saw their wealth increase.
The main takeaways from this story are:
- You should never leave all your wealth in one country (just like never putting all your eggs in one basket)
- Wealth managers not only protect but also enhance your wealth
We will focus on the role of wealth managers in this article.