Dutch households invest less than European average
Collectively, the Netherlands is among the largest investors in Europe. Few other countries invest a greater proportion of their national wealth in stocks and bonds. But if we zoom in on Dutch households, something stands out: they actually invest comparatively little. Researchers from De Nederlandsche Bank (DNB) arrive at this conclusion in an article published in ESB, a leading Dutch economics journal.
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According to the article, Dutch investments in the capital markets total €2,023 billion, which represents 77% of the Netherlands' national wealth. This is a substantial amount, the bulk of which is invested through pension funds and insurers. Dutch households put only 23% of their freely disposable assets into investment portfolios on average.
Brussels wants to see more investment
This means Dutch households invest less than their peers throughout Europe, where 36% of freely disposable assets are invested on average. American households invest far more, putting 79% of freely disposable assets into their investment portfolios. The European Commission would like to see things move in that direction in Europe too.
Earlier this year, it launched the Savings and Investment Union, a plan to channel more European savings into the European capital markets. The Commission believes that this is necessary because money currently held in savings and payment accounts could be put to better use in boosting the European economy. Moreover, European assets that do get invested tend to go into US investment funds and other securities.
Capital injection welcome
The Netherlands is a good example of this phenomenon. Some 70% of all investments by Dutch households are made outside the European Union. This percentage includes investments that households have invested through funds. Where – and whether – people invest will always remain a personal choice. However, if more of these investments remain in Europe, it will be easier and most likely cheaper for firms to secure growth capital.
The European business community would benefit from such a capital injection in any case. Economist and former European Central Bank president Mario Draghi calculated in 2024 that at least €750 billion needs to be invested in innovation in the European Union every year if the bloc is to remain economically competitive with China and the United States.
Tradition of saving
Households can provide much of the required capital, but there are a number of obstacles that must first be overcome. Culture is a factor: many countries have a firmly established tradition of saving. Households in Germany and Ireland, for example, prefer to leave their money in the bank in exchange for interest on their deposits.
Furthermore, research shows that Dutch households hardly invest in other European countries. A large proportion of Dutch assets go to US equity markets (mostly through investment funds) rather than to other markets in the EU. One explanation for this may be that direct investment between EU Member States is thought to be complicated. Each country has its own rules, for example regarding bankruptcy protection. This is one reason why companies often only seek financing in their own country rather than elsewhere in Europe. In turn, direct investors also prefer to put their assets to work in their home countries.
More information
ESB artikel Directe beleggingen Nederlanders blijven achter bij EU-gemiddelde (Dutch only)