‘We need to create a real single market for savings’

Only a fraction of Europeans invest in stocks, while American consumers are a lot more likely to get involved in financial markets. The European Union could make strategic regulatory changes to change this for the better

With historically low interest rates, Europeans look at their savings accounts with warranted frustration. Investments in commodities are traditionally popular, particularly in times of economic uncertainty, but there is only so much that the purchase of a few ounces of gold can do for European consumers. Comparatively, stocks don’t’ have widespread appeal with consumers. The reasons for that are not cultural.

Less than 15% of Europeans (often merely 1% in Central and Eastern Europe, 15% in Germany, up to 40% in the Netherlands invest directly or indirectly in stocks. By contrast, up to half of American households have purchased stocks directly or equity through funds, most of the time as a long-term saving commitment. One reason is that while working with financial services across state lines is seemingless in the United States (think the federal 401k retirement accounts scheme), Europe is on a higher level of complication. The S&P 500 Index had an average annual growth performance of 8%. Most Europeans can only dream of such annual yields that double ones investment every nine years. The compound effects of this are even more significant. If a 29-year-old invests €40,000 at such an annual performance rate in stocks, she has €640,000 at age 65 and that does not even include additional cash injections into her investment account. For comparison the average wealth of adults in Western Europe is around €250,000 (with a much lower median wealth).

But when we think of “investors” or buying and trading stocks in Europe, we picture wealthy individuals and large corporations. But in fact, lower middle-class consumers can have their share in the world economy, and guarantee themselves long-term growth, if we ease the burdens on them purchasing stocks. Instead of propagating fear, legislators and regulators should embrace small-scale private investments, and provide consumers with information. For too long, we have seen investors painted with a broad brush. Only in popular shows such as Shark Tank and Dragon’s Den have investors anywhere near the necessary appeal towards the broader public, while in parliaments across Europe, the mere word is side-eyed with suspicion.

The Markets in Financial Instruments Directive (MiFID) of the European Union is looking at an upcoming overhaul. Private investment should be facilitated, not made harder through regulatory changes. Legislators should create a real single market for stock and fund investments and lower the barriers for companies offering stocks and exchange traded funds (ETF) directly to consumers.

Historically stock markets have outperformed and other kinds of saving schemes. Right now only a small faction of Europeans benefits from high single digit growth of their retirement savings. European policy makers should endorse a shareholder culture through smart regulation and stop bashing capital markets as these can deliver wealth for a broad share of European savers.

Originally published here.


The Consumer Choice Center is the consumer advocacy group supporting lifestyle freedom, innovation, privacy, science, and consumer choice. The main policy areas we focus on are digital, mobility, lifestyle & consumer goods, and health & science.

The CCC represents consumers in over 100 countries across the globe. We closely monitor regulatory trends in Ottawa, Washington, Brussels, Geneva and other hotspots of regulation and inform and activate consumers to fight for #ConsumerChoice. Learn more at consumerchoicecenter.org

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to top