Turning savings into investments
Households across Europe have accumulated hundreds of billions of euros of extra savings as repeated Covid-19 lockdowns have limited their opportunities to spend. The question now is whether this money will be spent as soon as the pandemic is over, or whether attitudes towards saving and investing have permanently shifted.
To find out, we asked over 5,000 savers across 10 European countries to tell us how they feel about saving and investing. The results were split between men and women to allow for comparisons. What we discovered shines a light on some of the areas that will matter most if savers are to meet their financial goals in the post-Covid world.
Financial independence requires a plan
Today’s low interest rates mean that only investing offers the opportunity to meet long-term savings goals. Yet a third of women and a quarter of men have no investments. The biggest difference between investors and non-investors is that most investors have some kind of financial plan, while a significant proportion of non-investors have no plan whatsoever.
Investors have better financial well-being
Investing is more rewarding than saving, not just financially, but also in terms of overall self-worth. Investors are more likely to believe they will be better off in three years’ time than non-investors, and therefore tend to be more confident about their financial situation. Financial autonomy is linked to greater self-esteem, which in turn is a major contributor to overall well-being.
Complexity is the biggest obstacle to investing
Respondents believe investing is more challenging and requires a larger commitment than saving. There is a general fear of losing money and some concern about keeping track of how investments are performing. The perceived complexity, lack of transparency and lack of control need to be addressed to convert savers into investors and to convince current investors to increase their holdings.
Sustainable investing has a significant role to play
Sustainable investing could provide a significant incentive to invest, for non-investors and investors alike. A quarter of respondents said that they would have more confidence in investing if they knew their investments were contributing to a more sustainable world. Almost three quarters of respondents overall believe sustainable investing is important.
Social attitudes to investing are changing
There is significant appetite among non-investors to move some of their savings into investments, while many current investors say they will invest more. Unlocking this future investment potential will require a number of key developments, including the provision of better financial education for first-time investors, help with long-term financial planning, and clearer communication around investment performance.