AFM Consumer Monitor 2023 Q4: Investors

AFM Consumer Monitor 2023
Q4 | Investors
8 December 2023
Joost Leenen, MSc. dr. Millie Elsen
Benjamin Feher, MSc.

Background
The AFM advocates for fair and transparent financial markets. As an independent conduct supervisor, the AFM contributes to sustainable financial well-being in the Netherlands. The Consumer Monitor provides insight into developments in consumer behavior over time. The monitor was launched in 2004 and has been conducted every six months since then among various target groups. The primary objectives of the Consumer Monitor are:

• to describe the behavior and attitudes of financial consumers;
• to describe market and product aspects in the financial market.
  Guide to Reading
  This report contains the results of the Consumer Monitor conducted in October 2023 (Q4 2023) on the sub-topic "Investing." Fieldwork was conducted in the online LISS panel between 2 and 30 October 2023. The questionnaire was administered to a (random) sample of Dutch investors. The questionnaire covered various topics, including the forms in which one invests, the motivations for investing, the level of activity, and risk perceptions. The differences between groups of investors (such as age groups) described in the commentary in this report are statistically significant (p < 0.05), unless stated otherwise.

Table of Contents
Introduction
Introduction 2
Investors and Investment Forms 3
Investor Motivations 10
Level of Activity 17
Risks and Risk Perceptions 22
Receiving and Seeking Information 28
Characteristics of Investors 33
Sustainability 36
Research Method and Sample Description 39

Investors and Investment Forms

About a quarter of Dutch households have investments Question (left): Do you and/or anyone else in your household currently have money invested in investment funds, stocks, bonds, derivatives, or other securities? Question (top right): Have you ever had money invested in investment funds, stocks, derivatives, bonds, or other securities in the past? Question (bottom right): Do you think you will invest money in investment funds, stocks, derivatives, bonds, or other securities in the future? Base (left figure) = all respondents (nationally representative sample, 18+), n = 4798; Base (right figures) = respondents who do not currently invest themselves, n = 3860 *The following are not included:

• Cryptocurrencies (such as Bitcoin, Ethereum, or stablecoins)
• Investments linked to your mortgage
• Investments linked to your pension via your employer (e.g., a pension fund). Note: Investments with (additional) pension as the goal on a regular investment account (box 3) or a tax-advantaged investment account (box 1) are included.
• About 1 in 5 Dutch people (19%) state that they have their own investments.
• Of the Dutch people who do not currently invest themselves, about one-fifth invested in the past, about one-tenth think they will invest in the future, and one-quarter do not know yet.
  In about a quarter of households (24%), one or more people invest.

7 out of 10 investors state they invest independently Question: How do you invest? Multiple answers possible. For investors who invest in multiple ways, the main way was determined with the follow-up question: "For each way, indicate what part (in percentages) of the total value of your investments you invest this way" (and for two or more equal (highest) percentages: "Which way do you consider your main way of investing?"). Base = all investors, 2022: n = 635, 2023: n = 711

• Most investors say they invest in one way (93%).

• 7 out of 10 investors state they invest independently. For two-thirds of investors (65%), independent investing is the main way of investing.

• About 3 out of 10 investors state they invest via asset management, and about 1 in 20 states they invest via a financial advisor.

• There are no significant differences in the way of investing compared to 2022.
  *An advisor gives advice on the investment strategy to follow. Based on this advice, you then determine yourself which investments to buy or sell.
  With asset management, your investments are managed and your money is invested in securities (such as stocks, bonds, and options). You agree in advance what the manager is exactly allowed to do. The manager is authorized to make transactions up to a certain limit and then decides themselves whether to buy or sell securities. Only afterwards does he tell you what he has done.

• Stocks (55%) and investment funds (50%) are the most chosen investment forms, followed by index investment funds, index trackers, or Exchange Traded Funds (29%) and bonds (19%).

• Investors in 2023 state slightly less often to invest in other investment forms (4%) than investors in 2022 (7%; other differences between 2022 and 2023 are not significant).

• Stocks (65%) and index investment funds (37%) are more popular among independent investors than among investors who use asset management (39% and 18% respectively). Investment funds (74%) and bonds (29%) are more popular among investors via asset management than among independent investors (42% and 17% respectively).
  Base = all investors, 2022: n = 635; 2023: n = 711; independent investors, n = 480; investors via asset management, n = 243 (investors who invest with advice not shown due to low number of observations) Stocks and investment funds are the most popular investment forms Question: In which forms do you invest [if you (also) invest via asset management: and/or is investment done for you]? Think of all the investments you have. Click here for an explanation of the forms. Multiple answers possible.

• 3 out of 10 investors (29%) state that the total value of their investments is lower than €5,000. Just over one-fifth say their investments are worth more than €50,000.

• The figure on the right shows what part of their total investment portfolio independent investors have invested in a certain investment form. For investors who invest in stocks, in about half of the cases (51%) the investment portfolio consists mainly or entirely of stocks (75 to 100%). For investors who invest in bonds, the bonds often form only a small part of the investment portfolio.
  3 out of 10 investors state to have investments with a value lower than €5,000 Question (left): What is the total value of your investments at this moment? *The following are not included: (1) cryptocurrencies (such as Bitcoin, Ethereum, or stablecoins), (2) investments linked to your mortgage, (3) investments linked to your pension via your employer (e.g., a pension fund; see page 4 for further explanation). Question (right): If you set the total value of the investments you invest independently at 100%, what part (in percentages) do you then invest in... Base (left figure) = all investors, n = 711; Base (right figure) = investors who invest independently, excl. "don't know", n = 480. Note: number of observations is low (n < 100).

Question: You indicated that you invest in stocks*. In how many different companies do you hold stocks? [Think here only about the investments you invest independently.] If you do not know exactly, make an estimate. *A stock is an interest in the capital of a company. The shareholder is thus a co-owner of the enterprise. Base = investors who invest independently in stocks, n = 300 Just over a quarter of independent investors state to hold stocks in 1 or 2 companies

• Independent investors with stocks hold stocks in an average of 10 different companies (median = 4).

• Almost 3 out of 10 independent investors (27%) state to hold stocks in 1 or 2 companies. 1 in 20 says to hold stocks in more than 25 companies.

• 1 in 5 investors states to also own cryptocurrencies (21%).1

• Of the investors with cryptocurrencies, about half (53%) say that the value is currently lower than €1,500. About one-third (32%) states that their cryptocurrencies currently represent a value of less than €500.

• Compared to 2022, slightly more investors in 2023 state that they do NOT have cryptocurrencies (79% vs. 75%). Of the investors who do have cryptocurrencies, a larger share in 2023 states not to know or not to want to say what the value of their cryptocurrencies is (1% vs. 9%).
  One-fifth of investors also have cryptocurrencies, usually with a value lower than €1,500 Question (left figure): Do you have cryptocurrencies (such as Bitcoin, Ethereum, or stablecoins)?
  Question (right figure): What is the total sales value of your cryptocurrencies at this moment?
  1 Note that investors who only own cryptocurrencies (and no other investment forms) are not in the sample.
  Base (left figure) = all investors, n = 711
  Base (right figure) = investors with cryptocurrencies, n = 114

Investor Motivations

• For 4 out of 10 investors who know how long they have been investing (40%), obtaining extra financial possibilities played a large or decisive role in their choice to start investing. The low savings rate also stimulated almost 4 out of 10 investors to start investing (38%).

• Influencers and (online) advertising played no role in the choice to start investing for most investors.
  Base = investors who know how long they have been investing, n = 700 Obtaining extra financial possibilities and low savings rate are the most often cited reasons to start investing Question: To what extent did the reasons below play a role in your decision to start investing at that moment?

• Half of the investors invest for longer than 6 years (the average is 11 years).

• Compared to investors who started investing longer ago, investors who started two years or less ago more often state that inflation played a role in their choice to start investing. They also seem to have experienced more social pressure: they more often state that they did not want to fall behind others in their environment, that they were pointed out by persons from their social circle, influencers on social media, or online advertising.
  Low interest rate was especially a reason for new investors to start investing 12 Question: To what extent did the reasons below play a role in your decision to start investing at that moment?
  Base = investors who know how long they have been investing, n = 700 = significant difference * P25 P50 P75 * * * * * 20 years 6 years 3 years

• On average, investors who invest independently named 2.2 reasons for their choice to invest independently. They most often cite as a reason that they want to be able to manage their investments themselves (57%). Other important reasons are that they find it fun or challenging to do this themselves (46%) and that the costs are lower (40%). Unfamiliarity with other options (investing via an advisor or asset manager) is almost never mentioned (1%).
  The ability to manage investments oneself and finding investing fun or challenging are the main reasons to choose independent investing 13 Question: Why did you choose independent investing? Choose a maximum of three reasons. What was your main reason for choosing independent investing? Base = investors who invest independently, n = 480

• Most investors invest with wealth preservation or growth as the goal, or as a supplement to the pension and/or to stop working earlier.
  Independent investors more often cite wealth preservation or growth as an investment goal than investing as a supplement to the pension and/or to stop working earlier (63% vs. 37%). Investors who invest via asset management cite pension supplementation and/or stopping work earlier almost as often as an investment goal (50%) as wealth preservation or growth (56%).

• Independent investors also relatively often invest for the pleasure or challenge of investing itself (32%).
  Wealth preservation or growth is the most often cited investment goal 14 Question: With which goal(s) do you invest [independently/with advice from a financial advisor/via asset management]? Base = investors who invest independently, n = 480; investors who invest with advice from a financial advisor, n = 38; investors who invest via asset management, n = 243 Note: the number of observations is low (n = 38)

• Most investors have one (independent: 52%, with advice: 52%, via asset management: 55%) or two (independent: 23%, with advice: 21%, via asset management: 26%) investment goals.

• In these figures, not only whether one has the goal is taken into account, but also what percentage of the total value of the investments is invested with the respective goal.
  Wealth preservation or growth is generally the most important investment goal of investors 15 Question: If you set the total value of the investments you invest with advice from a financial advisor at 100%, what part (in percentages) do you then invest...? *Here, investors who do not have the goal (0%) and investors who have the respective goal as their only goal (100%) are also included. Base = investors who invest independently, n = 480; investors who invest with advice from a financial advisor, n = 38; investors who invest via asset management, n = 243 Note: the number of observations is low (n = 38)

Level of Activity

• Just over 4 out of 10 investors (44%) check the value of their investments weekly or more often. 1 in 10 investors (9%) checks (almost) never the value of his/her investments.

• Independent investors check the value of their investments more often than investors via asset management.

• Investors who describe themselves as risk-seeking check the value of their investments more often than investors who see themselves as cautious.
  Just over 4 out of 10 investors check the value of their investments weekly or more often 17 Question: How often do you on average check the value of your investments you have via [independent investing/investing with help of an investment advisor/investing with help of an asset manager]? This concerns the value of your own investments, not the (stock market) price in general. Base = all investors, n = 711 *Investors with financial advice not displayed due to low number of observations

• According to their own statement, investors performed an average of 8 buys and/or sells in the past year (median = 3 transactions). One-third of investors (32%) states that they have not performed any transactions in the past year.

• Risk-seeking investors performed more transactions than cautious investors. Among risk-seeking investors, almost 6 out of 10 state that they have performed more than 5 transactions in the past year; among cautious investors, this applies to 2 out of 10.

• The way in which investors performed transactions has not changed significantly compared to 2022. Most investors performed transactions via internet banking or the website.

• Investors who performed more than 5 transactions did this more often via an app (other than internet banking) (56%) than investors who performed fewer transactions (34%).
  Two-thirds of investors state to have performed a maximum of five transactions in the past year 18 Question (left and middle): Have you performed one or more transactions (buys and/or sells) in the past 12 months? Think here of all transactions you have done yourself (with or without an advisor). Transactions you have done via asset management do not count. Question (right): In which way(s) did you perform these transactions in the past 12 months? Base = investors who invest independently and/or invest with advice, who know/how many transactions they have done, 2022: n = 430; 2023: n = 484 (left/middle figure); who have performed transactions and know the number, 2022: n = 275, 2023: n = 308 (right figure)

• A quarter of all investors (24%) states to have heard of autotrading or copytrading.

• Of the investors who state to have heard of autotrading or copytrading, about one-tenth has also occasionally used it.
  A quarter of all investors has occasionally heard of autotrading or copytrading 19 Question (left): Have you ever heard of 'autotrading' or 'copytrading'?
  Question (right): Have you ever used 'autotrading' or 'copytrading'?
  Base (left figure) = all investors, n = 711;
  Base (right figure) = investors who have ever heard of 'autotrading' or 'copytrading', n = 147

• Just over 4 out of 10 investors (44%) regularly deposit a certain amount of money on their investment account; usually once a month (34%).

• A quarter of investors (25%) states to deposit, but not regularly. 3 out of 10 (31%) do not (at this moment) deposit extra money on their investment account.

• There are no significant differences compared to investors in 2022.
  Just over 4 out of 10 investors regularly deposit a certain amount on their investment account Question: Do you regularly deposit a certain amount of money on your investment account? [Think here of all investment accounts you have.] Base = all investors, 2022: n = 635, 2023: n = 711

Risks and Risk Perceptions

• The vast majority of investors (97%) states that they would still be able to get by if the value of their investments were to drop by 25%. A small group (2%) states that they would have difficulty getting by in that case (and 1% does not know).
  Base = all investors, n = 711
  Almost all investors state that they can still get by in case of a 25% drop in the value of their investments Question: Suppose that next year the value of your investments drops by 25%. Can you still get by?

• Dutch government bonds are seen by independent investors as the least risky investment form by a large margin. Almost two-thirds of independent investors think that investing in this investment form involves no or a very small risk.

• Investing in Bitcoin is seen on average as the most risky: almost 9 out of 10 independent investors estimate the risk that someone who invests in Bitcoin loses a (large) part of their investment to be large or very large.1

• Just over a third of investors (36%) are not familiar with turbo's on the AEX or cannot assess the risks thereof. Of the investors who can assess it, the vast majority considers this product to be (very) risky.
  There are large differences in risk perceptions between investment forms 1 Note that investors who only own cryptocurrencies (and no other investment forms) are not in the sample.
  Question: Can you indicate per investment how large you estimate the risk that someone who invests in it loses a (large) part of their investment? Base = investors who invest independently, n = 480

• Just over 8 out of 10 of the investors who invest via asset management (83%) state that their risk profile has not changed in the past year.

• Of the investors who did change their risk profile in the past year, most went to a risk profile with lower risk.
  Just over 8 out of 10 of the investors who invest via asset management state that their risk profile has not changed in the past year 24 Question: If you start investing, you choose in consultation with your asset manager what risk profile is invested for you. That risk profile can be adjusted at a later moment. Has your risk profile changed in the past year? Base = investors who invest via asset management, n = 242

• Of the investors who know/want to say how much savings they have, a quarter states to have less than €10,000 in (savings) money (15% says to have less than €5,000). About 3 out of 10 investors state to have more than €50,000 in (savings) money.

• Investors with a higher total value of their investments also have, on average, more (savings) money.
  About 1 in 7 investors states to have less than €5,000 in savings 25 Question: How much (savings) money do you have in total in a checking account, savings account, savings deposit* and in cash? *A savings deposit is a savings form with a fixed term and a fixed interest rate. The term can be a few months to ten or twenty years. Base = investors who know/want to say how much savings they have, total: n = 606 (15% unknown), split by value of investments: n = 602 (for 4 investors the total value of the investments is unknown)

• Note: the number of observations is low (n = 94)

• In 2023, investors give their financial situation an average grade of 7.8. This does not differ significantly from 2022 (average grade 7.7).
• 1 in 20 investors (5%) gives their financial situation a 5 or lower.
  Investors give their financial situation an average grade of 7.8 26 Question (right): What grade would you give your financial situation at this moment? Your financial situation is good if you can pay all your bills, you can feel secure about your financial future, and you can make choices so that you can enjoy life. Base = all investors, 2022: n = 635, 2023: n = 711

Receiving and Seeking Information

• 6 out of 10 investors (60%) who invest via asset management state that their provider makes it clear annually whether their investment goal is still achievable. According to about 1 in 7 (14%), the provider does not do this, and a quarter (26%) does not know. These findings do not differ from those of 2022.

• Just over 4 out of 10 investors whose provider gives annual insight into the achievability of their investment goal receive this information via a personal web page (44%) and/or via an app (41%; a significant increase compared to 2022). About a quarter (23%) regularly has a conversation with a financial advisor.
  6 out of 10 investors via asset management state that their provider gives annual insight into the achievability of their investment goal 28 Question (left): Does your provider make it clear to you annually whether your investment goal is still achievable? [Think here of your main provider for asset management.] Question (right): How do you receive this information from your provider? Base (left figure) = investors who invest via asset management, 2022: n = 213, 2023: n = 242 Base (right figure) = investors who invest via asset management, whose provider makes it clear annually whether the investment goal is still achievable, 2022: n = 129, 2023: n = 147

• Just over 8 out of 10 investors have seen information about the height of the costs of investing in 2023 (1 in 7 has not, and 1 in 10 does not know).

• Two-thirds of investors (66%) state that their main provider has pointed them out to the cost information. A much smaller group (17%) has requested and/or searched for the information themselves. There are no significant differences compared to 2022.

• Investors who saw information about the costs of investing generally found the information easy to find (71%). 2% found the information difficult to find.

• 7 out of 10 investors who saw the information did nothing with the information. Investors who did take action primarily searched for (more) information about the costs of the investment product (13%) or the provider (10%).