Europe: Investors define the “average” COVID experience
Individuals in Europe fared better during the pandemic than other regions with six in ten reporting they experienced no impact from COVID-19. As a region, they report infection rates of 7% for individuals and 10% for their household, with moderate financial impacts from the pandemic.
The combination of swift action by policy makers and higher income levels among the respondent pool resulted in just 7% of investors losing their job or business for part of the year, and less than one in five (19%) losing household income. Financial prospects were also buoyed by average investment returns of 11.2% above inflation. As a result, just 11% of Europeans believe they experienced a significant setback to their financial security during the pandemic – the lowest number in any region.
Sentiment in Europe is more positive than Asia and Latin America. Six in ten investors say they feel assured about their finances, rather than stressed and overall, two-thirds say they are confident about their financial security, most prominently in Germany (74%), the Netherlands (78%), Switzerland (70%) and the UK (71%).
Investors find key investment and personal finance lessons in the pandemic
Beyond the risk concerns, investors also share a wide range of financial fears. When asked to select their biggest fears survey respondents in Europe highlighted a large, unexpected expense at the top of the list (30%). This sort of surprise was what worried investors most when asked in 2019, but the current environment has recast financial fears for many.
Whilst the survey revealed the various financial fears of investors, the global pandemic has helped them recognize a course of action to be better prepared for the next crisis. When asked what they’ve learned from the pandemic, most point to addressing key personal finance issues. Almost two fifths (39%) say they learned the importance of keeping their spending in check, while 23% say they learned the importance of avoiding emotional investment decisions and having an emergency savings account (20%).
A spotlight on global investment habits across generations
Given the high levels of returns investors achieved in 2020, 50% of those surveyed had made no changes in their investment accounts as a result of Covid-19.
Millennials were the most likely group to adjust, with 74% surveyed making some changes to their investment accounts. This demographic was more likely to increase their investments as a result of the pandemic (23% vs. 19% overall), step up their online trading activities (32% vs. 23% overall) and increase trading activities through their advisor (24% vs. 18% overall). Even as they increased trading, less than 10% (9%) globally said they opened up margin accounts that might fund these efforts.
Whilst Millennials were most likely to increase investments and trading activity, they were also more likely to make withdrawals from savings and investment accounts (24% vs. 19%) a number that aligns with the 28% who said they lost household income and 12% who lost their job or business for at least part of the year as a result of Covid-19.
Andrew Benton, Head of Northern Europe at Natixis Investment Managers, added:
“The pandemic has been a stress test as much on personal finances as the global economy. Investors have an appreciation for the invaluable lessons from the Covid-19 pandemic and coming out of the pandemic and into recovery, they clearly see opportunities to invest for growth. However, going forward, investors need to carefully consider the results they can realistically hope to achieve and rationalize those expectations with genuine tolerance for risk.”
