The silent loss of wealth affecting European savers: Is your money in danger?
Many Europeans keep their extra money in a savings account. While this may feel safe, it could slowly reduce their wealth over time. Inflation means that prices rise each year, and money sitting in a bank account often does not grow fast enough to keep up. As a result, people may be losing purchasing power without even noticing.
According to European Fund and Asset Management Association (EFAMA), this is a serious issue across Europe. Its Director General, Tanguy van der Werve, spoke to Euronews about how European households are missing major opportunities to build long-term wealth.
He shared some surprising numbers. Only about 26% of households in the European Union have ever invested in products such as investment funds, stocks, or bonds. In comparison, more than half of households in the United States have invested in the stock market over the past 30 years. This shows a big gap between Europe and the US when it comes to investing.
Over time, investing can bring strong returns. For example, a balanced investment fund portfolio grew by more than 50% between 2014 and 2023, clearly beating inflation. This means that people who invested during that period likely increased their wealth significantly. Meanwhile, those who kept their money in savings accounts may have seen very little growth.
There are several reasons why many Europeans prefer saving over investing. One important reason is taxation. In some countries, there are not enough tax benefits to encourage people to invest. In countries where tax incentives are stronger, more people tend to invest.
Another key issue is financial education. Many people do not fully understand how investing works. They may not know the difference between risk and long-term growth. Without this knowledge, investing can feel confusing or dangerous. As a result, people choose the option that feels safer — leaving money in the bank.
Pension systems also play a role. For many years, Europeans expected the government to provide strong public pensions in retirement. This created a sense of security. However, populations are aging, and governments cannot always fully support retirees as before. Private and workplace pensions are still underdeveloped in many EU countries. This makes it even more important for individuals to plan and invest for their own future.
In recent years, however, there have been some positive changes. Exchange-traded funds (ETFs) and diversified index funds have become very popular. These products allow investors to spread their money across many companies, reducing risk. They are usually low-cost and simple to understand.
Digital broker platforms have also made investing easier and cheaper. With just a smartphone, people can now open an account and start investing. This has encouraged more retail investors — especially younger ones — to enter the market.
Social media has also influenced investing trends. Many young people learn about finance through online platforms. While this can raise interest, it can also lead them toward risky investments like cryptocurrencies. Without proper education, they may not fully understand the risks involved.
So why do many Europeans still avoid investing? According to Van der Werve, it is often not an active decision, but inertia. People fear making mistakes and losing their hard-earned savings. Doing nothing feels safer than taking action. As long as their money is in a bank account, it feels protected — even if inflation is slowly reducing its value.
Better financial education could help change this mindset. When people understand compound interest and long-term growth, they can see the opportunity cost of not investing. Over many years, a well-diversified investment portfolio can provide steady returns and protect wealth from inflation.
There is also a cultural factor. In many European countries, talking about money is considered private or even taboo. Families often avoid discussing personal finance. This means children may grow up without learning basic investment concepts at home.
Experts believe financial education should start early — both at home and in school. Understanding money management, risk, and long-term planning can build confidence. It also helps remove common myths, such as the idea that investing is only for wealthy people.
Finally, the investment process itself can seem complex. Forms, fees, rules, and different products can overwhelm beginners. Simplifying these systems would make investing more accessible for ordinary households.
In summary, European savers may be losing wealth quietly by keeping too much money in savings accounts. Inflation slowly reduces the value of idle cash. While investing involves some risk, avoiding investment completely can also carry risks in the long term. With better education, clearer systems, and stronger incentives, more Europeans could take control of their financial future and build lasting wealth.
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