Households miss out on opportunities for higher returns: savings could be put to better use

A substantial group does not use its financial capacity to invest

New research by the AFM shows that in 2024 around one in three Dutch households did not invest, despite having more liquid assets than the Nibud reference buffer prescribes. A large part of this group consists of retirees, for whom the investment horizon is more limited. However, the group that has not yet retired also has substantial assets available that could be used to generate returns.

One in ten Dutch households (over 800,000) do not invest even though they currently have the possibility to do so and may face financial shortfalls later in life. These households are currently accruing insufficient pension entitlements in the first and second pillars to maintain their current standard of living after retirement. For this group, investing is therefore not only possible but may also be appropriate, as it could allow their available assets to generate higher returns. For half of this group, at least €30,000 is available above the Nibud reference buffer to invest. Additional returns will not be sufficient to fully cover the future shortfall in all cases, but they may improve the financial position without requiring households to adjust their current consumption pattern.

Reasons for not investing: knowledge, risk perception and personal preferences

A lack of knowledge is the most frequently cited reason for not investing. In addition, many households consider investing to be too risky or simply have little interest in it. Notably, some respondents indicate that they do not have enough money to start investing, even when they hold more assets than the Nibud reference buffer prescribes. Perceptions regarding the level of knowledge required, the amount of money needed and the risks involved may therefore create barriers for consumers to start investing. In addition, individual preferences play a role; not everyone wishes to invest, even when the financial capacity to do so is available.

Lowering barriers without compromising investor protection

The AFM strives to promote sustainable financial well being for all consumers. Sound wealth accumulation is an essential component of this. Investing can take place in different ways: independently, with advice or through portfolio management. It is important that households invest only money that they can spare in the long term, diversify sufficiently (both across products and over time), and are aware of the costs. In addition to investments that fall under wealth tax in box 3 of the income tax system, households can allow their assets to generate higher returns by making contributions to the third pillar (annuity products) or by making additional pension contributions to the second pillar (through the employer). Within the framework of adequate investor protection, the AFM is committed to reducing barriers for consumers to start investing and to simplifying processes. To this end, the AFM makes proactive proposals at both national and European level.

Jos Heuvelman, Executive Board Member AFM: “For many households, there are opportunities to allow their assets to work harder for them in a responsible way. For a large group, it may also be appropriate to do so. The AFM is committed to lowering barriers for beginning investors, without compromising strong investor protection.”

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