Europeans Hoard Cash as Stocks Remain a Risky Proposition

Households in the euro area are sitting on nearly €10 trillion ($11.5 trillion) in cash and low-yield bank deposits, but only a small percentage of them invest their wealth in stocks or other market investments.

A recent survey by the European Central Bank (ECB) found that around 80% of households own no stocks or other market investments, with most of their wealth held in property and cash.

The ECB economists sorted households into four groups based on what they own: those who hold most of their wealth in property, those who keep their savings parked in deposits, those who reach markets indirectly through workplace pensions and insurance policies, and those who directly invest in shares, bonds, or funds.

The survey found that while money is not the main barrier to investing, households are deterred by how risky they believe shares to be, followed by a lack of knowledge about financial products and low trust in financial markets.

The ECB wants to make investment options more accessible and has cited examples of successful programs such as Slovenia's national financial education program and Finland's simple equity investment accounts.