1 / 18

Understanding Household Economic Behavior in a Low Expected Returns Environment

Explore the impact of persistent low expected returns on household savings and investment decisions, highlighting the need for risk management and alternative investment strategies.

houtz
Download Presentation

Understanding Household Economic Behavior in a Low Expected Returns Environment

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. “How will Persistent Low Expected Returns Shape Household Economic Behavior” • A ReGULATOR AND savers’ perspective Financial Risks International Forum 2019 “Low Interest Rate Environment: Search for Yield, Risk Management and Transitions” Paris, 18 & 19 March 2019

  2. WHY SAVE ? • 1 ILB RISK FORUM MARCH 19th 2019

  3. WHY SAVE ? WHY INVEST ? Lowinterestrates • 10 years french government bonds : 0,42 % • 30 years french government bonds : 1,47 % Financial assets : lowperceivedperformance Investingin financialmarkets : high perceivedrisk ILB RISK FORUM MARCH 19th 2019

  4. WHY SAVE ? WHY INVEST ? REFERENCE POINTS • AMF Economists’ findings • between 1987-2017 • - for a one off-investment at the start of the period • over a 10 year horizon, • the average real annualised return • (net of inflation, charges and taxes) • 3,3% on bonds • 2,7% on equities • 1,3% on Livret A Lowperceived performance of financialassets ILB RISK FORUM MARCH 19th 2019

  5. WHY SAVE ? WHY INVEST ? REFERENCE POINTS AMF Economits’ findings Risk and performance 1987- 2017 Despite of - Historicallyfavourablecircumstances for bonds - Spells of volatility for equities Equities have deliveredbroadly comparable returns to those of bonds For a mixed portfolio invested in bothequities and bonds, thereis a benefit of an annualregularrebalancing With a long term horizon High perceivedrisk in investing in financialmarkets ILB RISK FORUM MARCH 19th 2019

  6. WHAT ARE • SAVERS ’ NEEDS ? • The AMF SavingAND INVESTMENT BAROMETER • 2 ILB RISK FORUM MARCH 19th 2019

  7. WHAT SAVERS’ NEEDS, WhereARE THEIR CONCERNS ? ANTICIPATING NEEDS for AGING UNFORESEEN EXPENSES PREPARING for RETIREMENT 69 % in 2017 Stable/2017 Stable / 2017 83% 72% 76% A NEST EGG FOR NOW AND FOR THE FUTURE ILB RISK FORUM MARCH 19th 2019

  8. INVESTMENT : SELECTION CRITERIA RISK EXPECTED RETURN ILB RISK FORUM MARCH 19th 2019

  9. EXPECTED RETURN/ NET PERFORMANCE ? NET PERFORMANCE Inflation Tax Social charges and Taxes Costs & charges 1,6% ILB RISK FORUM MARCH 19th 2019

  10. CONCERNS FOR THE FUTURE AND INVESTMENT HORIZON • HOW TO INVEST FOR A LONG TERM HORIZON WHEN • IS THE AVERAGE MAXIMAL DURATION OF INVESTMENTS ? 4,9 YEARS ILB RISK FORUM MARCH 19th 2019

  11. HOW TO INVEST ? • A lowlevel of risk • A relative high expected performance • Not long terminvestmentoriented • … ILB RISK FORUM MARCH 19th 2019

  12. PSYCHOLOGICAL AND BEHAVIORAL BRAKES • AND LEVERS • 3 ILB RISK FORUM MARCH 19th 2019

  13. BRAKES : MISCONCEPTIONS ABOUT EQUITIES • Equities are not spontaneously seen as suitable for long-term savings. • Savings in shares are seen as risky or even unprofitable • Shares are not seen as easily accessible and affordable assets. A qualitative survey AMF - KANTAR-TNS ILB RISK FORUM MARCH 19th 2019

  14. LEVERS FOR LONG TERM INVESTMENTS (1) THE AMF SAVING AND INVESTMENT BAROMETER RESULTS 16% Younger (35 ans +) Financial assets : 30- 100 KE 24% Male CSP + Financial assets: 50-150 Self confidence AND Trust in the future ILB RISK FORUM MARCH 19th 2019

  15. LEVERS FOR LONG TERM INVESTMENT (2) TO UNABLETO INVEST IN EQUITIES FOR THE FIRST TIME • Younger people are more comfortablewithrisk Younger people mention « ethics» more often SUSTAINABLE FINANCE TO FINANCE THE ENERGY TRANSITION and Financial Education March 25-29th 2019 Oct 2019 ILB RISK FORUM MARCH 19th 2019

  16. INVESTMENT SCAMS VIGILANCE • 5 ILB RISK FORUM MARCH 19th 2019

  17. SCAMS ON INTERNET ILB RISK FORUM MARCH 19th 2019

  18. Whatis a saver’s perception of risk ? A STORY OF Paradox 2018 2019 ILB RISK FORUM MARCH 19th 2019

More Related