FD Column by Laura van Geest: 'Saving or Stock Market: The Netherlands Can Be More Financially Literate'

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Article

08/05/26

Do the Dutch have sufficient buffers for uncertain times? Do they use buffers wisely for a good 'old age'? The figures say no. AFM CEO Laura van Geest advocates for more investing – it yields returns, for the individual and the economy. The column appears online on Friday (behind login) and in the physical newspaper on Saturday.

Keeping the household accounts in order. Having a little something for a rainy day. As Dutch people, we like to pride ourselves on it. But how financially savvy are we actually in practice? In times of uncertainty, a little buffer can't hurt. And with aging on the horizon, it's good to also think about old age. Spoiler alert: there is room for improvement. Interestingly, on both ends of the spectrum.

First, there are people without any savings pots. And these are not only people with tight budgets. Among middle-income earners, 23% have a buffer of less than a month. Among high-income households, it is still 15%. The 'Pay Yourself First' campaign (automatic, as soon as income hits your account) aims to stimulate saving habits – by cleverly using behavioral insights, it counters social pressure, short-sighted behavior, and unfamiliarity.

On the other hand, there are people who do have a substantial buffer, but who mainly let it gather dust in a savings account. For initial emergencies, that is of course sensible, as you need easy access to your money, but beyond that? Risk-bearing investing yields higher returns. One in three households did not invest in 2024, while they had sufficient means for it, taking the Nibud's buffer advice into account. For one in ten households (around 800,000), it applies that they do not invest, while they are building up insufficient pensions in their first and second pillars to maintain their current standard of living during retirement. A missed opportunity.

Fear of Risks Why don't these people invest? Not because of the changes to the tax regime in box 3, as some might think (in 2019, the figures for non-investing were comparable). More than half cite insufficient knowledge as the reason, around 40% are deterred by the associated risks, and around 30% find it uninteresting. Interestingly, one in six believes they do not have sufficient wealth, while this group actually holds more wealth than the Nibud suggests as a reserve.

This all places a regulator like the Authority for the Financial Markets (AFM) in dilemmas. As a regulator, we are of course more likely to be held accountable when something goes wrong with investments than when people let opportunities pass them by. And that something can go badly wrong is evident. Last year, the AFM estimated investment fraud at around €750 million, and thanks to AI, we fear a growing market here.

As a behavioral regulator, we also know that people are susceptible to behavioral failures. Regulations and supervision must prevent these from being exploited too easily. While the optimal investment strategy focuses on the long term, phased entry, diversified portfolios, and then stepping back, consumers are easily tempted into frequent trading (resulting in higher costs) or overconfident trading.

Temptations Such as 'long shots' in the form of complex, risky, and illiquid products. Think of private credit. Just as the hype seems to be fading, providers are approaching retail customers for whom this product is generally not suitable. And I haven't even mentioned cryptocurrencies yet; volatile in price and offered in a world with almost no duty of care, where apps effortlessly exploit things like FOMO – fear of missing out. Or the new world of prediction markets, the market for predictions ranging from the weather to the closure of the Strait of Hormuz. A world that comes dangerously close to gambling (in the Netherlands only permitted with a license) or a binary option (prohibited for retail customers in the EU).

And what about the current economic climate? Dark orange code according to President Olaf Sleijpen of De Nederlandsche Bank. And as the AFM, we are also surprised by the muted reaction of financial markets to the accumulating risks. Is this the right time to step in?

Savings and Investments Union And yet we think: a pity. Because investing yields returns. A pity for the individual consumer who could secure themselves a better old age. A pity for the Dutch and European economy, which could make good use of risk-bearing capital for the major challenges they face. Not for nothing is the Savings and Investments Union (SIU) high on the European agenda. Analogous to the saving campaign, consumers could easily manage with, for example, a monthly contribution to a broadly diversified index fund.

As the AFM, we are not an investment advisor and we do not want to become one. The sustainable financial well-being of the consumer is our task. Protect where necessary, but without unnecessary barriers. And that requires balancing art.

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