European Private Investors Cautious – Americans Less So

Private investors in both Europe and the US continue to prefer short-term savings products, according to the Investment Barometer, a representative survey by the GfK Group on behalf of The Wall Street Journal Europe. The mood in Western Europe is more cautious than in the USA, which is reacting to positive economic forecasts.

Higher risk investments are growing again in the US: twelve per cent more Americans are currently investing in shares and share-based funds than in the autumn of the previous year. In Western Europe, investors are being more cautious with their money than in the previous year: 60% currently hold their money in short-term savings products, an increase of 6% on 2002. At 44% overall, the next most popular forms of investment are life insurance and pension funds, almost unchanged on the previous year.

Western European investors are still waiting for the stock markets to recover, and are more pessimistic about their own financial future. A year ago, 27% of investors still held shares or share-based funds: this figure has now fallen to just under a quarter (24%). 38% of those surveyed in Western Europe believe that they will have less to put aside over the next twelve months than in the previous year, and only 15% that they will be able to save more (in the US the latter figure is 40%).

Shares are still the most widespread form of investment in the USA. Twelve months ago, 44% of US savers invested in shares or share-based funds and the number has now risen to 56%. Around one in four Americans still consider listed securities to be the most important type of investment, with only 11% of Western Europeans saying the same.

Respondents were asked what they would do if they had US$50,000 at their disposal, and a higher proportion of Americans than Europeans would invest in shares or share-based funds (in the US, one in three vs one in five in the previous year). In Europe, only the Swedes are this happy to take a risk on shares.

The Germans emerge as lovers of life insurance - 44% are currently paying into this form of pension provisioning - well above the European average. Despite the Riester pension products and the debate on pension provisioning, pension funds are comparatively unpopular in Germany. Only one in twenty say they currently invest in pension funds, almost unchanged on the previous year. In a European-wide comparison, only investors in France show less interest in this form of investment.

Respondents with a higher level of education and income are more willing to invest in riskier products. 29 per cent of higher earners said they held shares or share-based funds, versus 17% of those on middle incomes and 7% of those on low incomes. Generally, of course, people on higher incomes invest more in all types of investment products than those who are less well off, having more available.

Private investors who are university graduates are also more inclined to invest in listed securities than school leavers, and also expect to be able to save more over the next 12 months - 16% of graduates and only 6% of school leavers expect to have more to save in the next 12 months.

The Investment Barometer is conducted twice a year and asks private investors in Europe and the USA about the financial investments they hold, how would they invest EUR or $50,000 and their most preferred and least preferred form of investment. This wave of the survey was conducted by GfK Ad Hoc Research Worldwide on behalf of The Wall Street Journal Europe, with financial support from GfK-Nürnberg e.V. between September and October 2003 and comprised a total of 14,544 people in 18 countries.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

• GfK Germany
• All news