The British and Dutch are likely to go out and spend more money once lockdown measures are over, while Swedes will spend less, a Schroders study suggests.
More Europeans saved more than they planned to save through the pandemic compared to counterparts in Asia and the US, but levels of pent-up spending look set to differ should the severity of the pandemic recede.
In general, increased savings globally could be a “lasting legacy” of the pandemic as people pay more attention to their financial wellbeing, including pensions, the research among 23,000 people shows.
The Schroders Global Investor Study 2021 found that over a third (38%) of investors in Europe had saved more than planned, followed by investors in Asia (28%) and the Americas (27%).
Investors in the USA, Netherlands and the UK are set to be the most likely to increase spending once their respective lockdowns have lifted. At the other end of the scale, the most cautious investors were based in Japan, Sweden and Hong Kong, Schroders said.
Globally, though, almost half of investors (46%) will now save more once restrictions have been lifted. This sentiment is strongest among investors aged 18-37, but 58% of retirees are now more conservative in terms of spending their retirement savings.
The good news for pensions is that 67% of those yet to retire now want to save more towards their retirement.
Stuart Podmore, a behavioural investment specialist at Schroders, said the pandemic had led to a stronger focus globally on financial planning and wellbeing.
But he also warned that expected investment returns could be unrealistic.
“Although this is a global study, we all share common wants and needs, and financial security is a key focus for all of us. At the same time, we need to exert caution over the investment returns we expect over the coming five years, as the outlook shared by many investors – and in particular those who believe themselves to be experts – is exceptionally optimistic.”
The average expected annual return over the next five years is 11.3%. Investors in the Americas were the most bullish, expecting annual total returns of 12.5%, followed by those in Asia (12.3%) and slightly more cautious investors in Europe with expectations of 9.7%.
Investment confidence is being driven by investors who class themselves to be ‘expert/advanced’ with return expectations of 12.8%, compared with 8.9% for self-purported ‘beginner/rudimentary’ investors.
Podmore said investor confidence had soared to its highest level since the study began in 2016.
The increased level of attention to personal finances is seen where almost three-quarters (74%) of investors globally said they spent more time thinking about their financial wellbeing since the pandemic.
Geographically, this change was most pronounced in Asia with investors in Thailand, India and Indonesia sharing this view strongly.
Also, investors globally are now more likely to check their investments at least once a month (82%), compared with 77% of investors in 2019.
The study was carried out in March across 32 locations and among people who expect to invest at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last ten years.
© 2021 funds europe
