Is your money at risk?

Parking spare cash in a savings account remains the norm for the majority of Europeans – particularly compared with Americans – with cash sitting idle and losing ground to inflation. But just how significant is the challenge of encouraging investment across generations on the continent?

The director general of the European Fund and Asset Management Association (EFAMA), Tanguy van der Werve, told Euronews’ Business Editor Angela Barnes on Friday just how staggering the numbers are.

“Only about 26% of EU households reported ever owning an investment product such as funds, stocks or bonds (Eurobarometer 509), while for the last three decades, more than 50% of US households reported stock market investments (Gallup poll).

“If you consider that an average diversified fund portfolio would have grown by over 50% from 2014–2023 (ESMA), far outpacing inflation, that is a lot of potential wealth-building Europeans are leaving on the table,” he said.

“Only about 26% of EU households reported ever owning an investment product such as funds, stocks or bonds (Eurobarometer 509), while for the last three decades, more than 50% of US households reported stock market investments (Gallup poll).”

Van der Werve highlighted a number of reasons that could explain why Europeans prefer saving to investing, including taxation, financial literacy, risk appetite and pension systems.

“Lack of sufficient tax incentives are often a key differentiating factor between countries with high levels of investment and those without. Also, many EU countries suffer from low levels of financial literacy and lack of an investment culture. Many generations of Europeans grew up expecting the State to take care of them in retirement, which can no longer be exclusively relied upon.

“This false sense of security does not encourage people to take control of their financial future and look beyond bank deposits. Workplace and private pensions are underdeveloped in many EU countries, which also contributes to the low level of retail participation in capital markets,” he added.

Related

On notable trends from the past year (2025-2026) showing changes in retail investment behaviour or risk appetite across EU countries, EFAMA’s director general said the huge popularity of ETFs and investing in diversified index tracker funds, combined with digital broker platforms for purchasing, has helped to increase retail investment in several EU countries in recent years.

“Together, this has made the decision to invest simpler, cheaper and easier for many households. The impact of social media has also been significant, especially for younger investors who are easily swayed toward riskier ‘assets’ like crypto. This is another reason to prioritise financial education from a young age,” he said.

Related

Returning to why fewer Europeans may be parking their money and losing out to inflation rather than capitalising on compound interest, Van der Werve said he believes it is less a “choice” and more a matter of inertia.

“People are worried that if they do something, they will make a mistake and lose their hard-earned money. So they do nothing and leave it in the bank account, where it is considered safe. Better financial education would help people understand the opportunity cost of not investing. Long-term, well-diversified portfolios deliver consistent returns over time and will prevent inflation from eating away your wealth. In many EU countries, there is a cultural taboo around discussing money, even within the family, which definitely isn’t helping.

“Financial education needs to start at home. The best investment one can make is in his/her financial education. Improved financial literacy helps build trust and fight common misconceptions (e.g. you need to be rich to invest). The (over-)complexity of the current investment process also contributes to people staying in bank deposits,” he added.

“Financial education needs to start at home. The best investment one can make is in his/her financial education.”