Savings: the French are allergic to risk

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We knew the French shower risk, but at this point! According to a survey conducted by AXA IM in June, even before a disastrous October in the markets, with 1,000 people in France (7700 in six countries), it appears that only 9% of the French are ready to take a risk to obtain a better return … compared to a rate of 30% in Asia where the "risk culture is stronger," says Bettina Ducat at AXA IM.

Savings: the French are allergic to risk

Because it is a question of culture. "The French are cautious by nature in their daily lives," says AXA IM's head of development and supply. The asset manager has indeed asked them the question: they are, on average, only 20% willing to take risks in their work, their sport, their travels or their romantic relationships. Not surprisingly, with age, this share decreases again (33% among 16-21 year olds, against 11% for those over 55). But also notes the study: whether they are 30 or 60, the French have the same exposure to the actions.

The fear of losing

What is it? First to the fear of losing money. This is the first answer justifying the non-holding of investment on the financial markets. Just in front of "I do not have enough money to be able to risk losing". Whatever the age. The lack of financial knowledge comes third in the 16-39 age group. They are even 75% to prefer not to win anything rather than to take the risk of losing money.

"This prudence is manifested by the willingness of a third of respondents, to build a financial cushion if things go wrong," says Bettina Ducat. Retirement is also a concern for 46% of them, as well as the need to provide care for their old age (33%). "There is still an antinomy between this desire to build a safety net and these long-term goals." This also reflects a form of insecurity in the medium term. In fact, just one in two respondents is confident in their financial future in the next three years.

Impact on the standard of living

Unsurprisingly, the wealthiest people are also the ones who are most willing to take risks. The "Mass Affluent", people with more than 100,000 euros of savings, invested 69% of their assets outside their principal residence in financial products, against 20% for the others. "They may be better informed and better supported," says Marie-Pierre Ravoteur, Head of Quant Lab at AXA IM. "Moreover, their income and their savings allow them to take more risk because the impact of a loss on their standard of living will be less strong".

"Many highlight the crash to explain this risk aversion, yet many respondents did not experience it as an investor. Secondly, the long-term performances show that it takes less than ten years for the markets to return to their previous level, "continues Marie-Pierre Ravoteur.

But here too, family culture comes into play. 47% of 16-34 year olds turn first to their parents or elder for financial advice. "It's a self-maintained circle," says Bettina Ducat.

Yield goal of more than 5%

The teams of the manager took the calculator to answer this question: that become 10,000 euros placed very carefully and that they become with a higher dose of risk. Based on market data between 2013 and July 2018, the average asset allocation of 25-year-olds in France would be worth 35,664 euros at age 65. With a more aggressive allocation up to 40 years, the young retiree would have a capital of more than 49,000 euros and even 65,000 euros if he maintained this offensive orientation until 45-50 years.

A long-term strategy that is close to the objective of financial performance of the French. They are 70% to aim for an average return of at least 5% per year (30% even expected an annual gain of 10% or more!). "Investors focus a lot on the short term and forget that their investment horizon can range from 25 to 40 years."

The booklets A and PEL remain the star among the French who owns 79% of them. But they are also 3% to indicate to hold bitcoins or another equivalent cryptocurrency, out of a total of 20% holding an investment product according to the AXA IM survey. Above all, in detail, they are three times more likely to have among the French less well off (and therefore the most allergic to risk) than among the "Mass Affluent", those holding a wealth of more than 100,000 euros.

Pierrick Fay