ARBES SURVEY: CZECH HOUSEHOLDS AND THEIR WILLINGNESS TO ACCEPT INVESTING RISKS
Czechs still tend to direct their savings into term deposits, savings accounts, building societies or pension insurance savings plans. This is the conclusion of a survey conducted by the Yeseter agency for ARBES Technologies, a leading Czech developer and supplier of information systems for banking and finance. Other analyses and surveys (e.g. Eurostat) further confirm that as compared to the EU average, the Czech Republic is behind in terms of investments into securities, FOREX and commodities.
In 2013, Czech investments into stocks were about 1.5 percent while the Eurozone average was 3.6 percent of total investments made by households. This could change in the next few years and modern information technology could help. The main purpose of the survey was to determine why Czechs are not open to investments into securities, FOREX and commodities directly or via investment funds and what could change their mind.
Only 12% of Czechs make investments into mutual funds and only 5% of Czechs make investments into stocks. The most frequently selected length of investment is three to six years. Only people between the ages of 35 and 55 make investments for six years or longer. “This is in contradiction to the logic of investments, since most funds should be directed into long-term investments while only the reserve for the instance if one of the household incomes is lost should be directed into mid-term and short-term investments such as most savings products offered by banks,” explains Jan Denemark, CEO of ARBES Technologies. Younger as well as older generations thus invest into short-term projects, most of which are up to 2 years. The recommendation to make investments most often comes from acquaintances and friends (55%) and only 35% come from bankers.
65% of investing Czechs use the services of a financial advisor but they tend to be unhappy with their service and some feel that their services are too expensive. On the other hand since they feel they do not understand the investing world well enough, they do not feel comfortable making investments on their own. This foreshadows the main reason behind the Czechs’ unwillingness to make investments into stocks, FOREX and commodities even indirectly via mutual funds, which is inadequate knowledge and mistrust stemming from not understanding the issue at hand.
“According to the analyzed responses on social networks, it is apparent that Czech Republic’s citizens have a much smaller share of their available funds invested into stocks as compared to the Western world. The reason is inadequate understanding of investments and finance. The entity who will become visible in this area, e.g. via various contests, tests, simulations and quizzes has a big chance of biting off a large chunk of this potential market,” says Jan Denemark.
Modern technologies, which will offer users simple control and operating functions, verified sources of information and the option to receive training in this field could significantly change this situation. “Our new online platform for trading on capital and money markets ARBES myTrader will allow for professionals as well as beginner investors to make investments anywhere and anytime, even from the comfort of their own home. It also brings several innovative functions such as social trading and advanced analytics,” stated Jan Denemark. Investors are currently making decisions primarily based on fundamental and technical data analysis of the given investment product. Social trading will allow for each investor to monitor investing decisions of other investors online. A beginner investor can thus monitor a senior specialist on investments into stocks on the Prague Stock Exchange etc. It is similar to “sharing” information on social networks transported into the world of investing.
Thanks to this application, the investor can easily make an investment and monitor its growth. The survey showed that 55% of investors would like to monitor the status of their investments online, at least twice a month. A regular paper statement is still considered to be an important historical document useful for temporary archiving purposes but its value is decreasing with only about a third of Czech investors considering it as important. A meeting with a financial advisor is welcome but it takes up too much time and that is why only 15% of those surveyed prefer it.
The fact that ARBES myTrader can ignite further interest in investments made into securities, FOREX and commodities also relates to the fact that Czechs consider such investments to be accelerators of their interest in those investments. There are various ways of “trying out” such trading (25% of those surveyed), education on such investments (20% of those surveyed) and finally the option to invest smaller amounts (30% of those surveyed), which can also indirectly support myTrader thanks to making individual transactions “cheaper” by eliminating the broker from the transaction.
Every investor – ARBES myTrader user – can have access to shares traded on the Czech Stock Exchange as well as to favorite and well-known titles such as Apple, Facebook, American banks and German companies such as Siemens or E.ON. ARBES myTrader is connected via data providers to stock exchanges virtually anywhere in the world. The trend in the volume of investments is changing, since the average trading volume of the Prague Stock Exchange increased by 23% to 758 million CZK in 2015 as compared to 2014.
ADDITIONAL SURVEY DATA
One quarter of Czechs expects annual investment appreciation in the amount of 15%, one quarter would like an appreciation in the amount of 10% and one fifth would be happy with a 5% annual appreciation.
40% of investors make an investment in the amount of 50 000 CZK annually, 30% in the amount between 51 000 and 100 000 CZK.
The most frequently mentioned use of earnings is their subsequent investment, that is to say earned returns from investments are used for future investments, marked here as reinvestments (35%). Other uses are real estate purchases (20%) or automotive investments in a higher price bracket including motorbikes and yachts (15%).
An exclusive analysis of social networks and web discussions carried out by Yeseter analyzed the period between January 1 and May 31, 2015 covering a total of 37 928 comments on the topic of investment products and investments. Articles on news servers, blogs, discussion comments under such an article or a blog, mentions in a discussion forum, tweets on Twitter, comments on Facebook or Google+ were all considered.
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