Investment: number of shareholders rises to record high

The stock market year 2022 was not for the faint of heart.

Investment: number of shareholders rises to record high

The stock market year 2022 was not for the faint of heart. After the 2021 boom, the Ukraine war, energy crisis and record inflation caused prices to slide, the leading index Dax fell below 12,000 points at times. The turnaround in interest rates makes savings accounts and overnight deposits attractive again. Nevertheless, never before have more people in Germany invested money in shares, funds and/or exchange-traded funds (ETFs) than in the past year. With 12.89 million shareholders, the previous high from 2001 (12.85 million) was slightly exceeded, as calculated by the Deutsches Aktieninstitut (DAI) in Frankfurt. After the decline in 2021, is this the trend reversal long awaited by stockbrokers?

"2022 was a very good year for stock culture in Germany," summarized the head of the stock institute, Christine Bortenlänger on Tuesday. Measured against the local population aged 14 and over, almost one in five (18.3 percent) was involved in the stock market.

Some investors probably used the downturn on the stock markets as a good opportunity to get started, while old hands on the stock exchanges were not disturbed by the fluctuations. According to calculations by the institute, the number of share savers in Germany increased by almost 830,000 from 2021 to 2022. However, the truth is that the DAI statistics have also included foreign shareholders resident in Germany since 2020. That alone caused an increase of 500,000 at the time.

Strongest increase in the under 30s

According to the information, the strongest increase within a year was among the under 30-year-olds. The number of shareholders in this age group increased last year by almost 600,000 or 40 percent to just under 2.1 million. Small amounts of money can also be invested quickly using a smartphone app, and financial influencers address a young audience on channels such as Instagram, Tiktok and YouTube. The stock institute even speaks of a "youth boom" on the stock exchange.

A survey published at the beginning of January on behalf of the Association of German Banks (BdB) confirms this trend: seven out of ten respondents aged 18 to 29 consider shares to be suitable for old-age security. According to this information, the proportion of investors among young adults in Germany has grown from 38 percent to 54 percent since 2019.

Many consumers lack staying power

The stock institute regularly calculates in its "return triangle" how, for example, an investment in Dax securities pays off over the years in the majority of cases: "For example, with an investment period of 20 years, you could achieve an average return of 8.6 percent a year on the money invested. In the worst case, the annual return was 3.3 percent, in the best 15.2 percent."

Alone: ​​Many consumers lack the staying power that an investment on the stock exchange sometimes needs. In addition, the rapidly rising prices for energy and food are currently slowing down savers. In a survey published in autumn on behalf of Postbank, which belongs to the Deutsche Bank Group, more than half (53.9 percent) stated that they could currently save less money or not save anything at all because of the sharp rise in expenses used up the household budget for everyday life.

"A growing number of savers no longer have funds that they can invest permanently," stated Ulrich Stephan, Deutsche Bank's chief investment strategist for private and corporate customers. "And a long-term investment horizon is mandatory for securities in order to be able to cushion price fluctuations." A crash like that of the Telekom share, which was previously touted as a "people's share", shortly after the turn of the millennium or a general price slide like in the financial crisis of 2008 or at times during the corona pandemic must first be made up for in the depot.

Skepticism about equities remains widespread

According to a YouGov survey commissioned by HDI Lebensversicherung published in December, four out of ten people in Germany fundamentally distrust stocks. The verdict of the skeptics: stocks are too risky and too complicated. Surprising: At the same time, only a good quarter (26 percent) fundamentally reject investing in shares. The conclusion of the HDI in view of such contradictory results: Clarification is urgently needed.

"Despite all the joy about the many new investors in stocks, stock funds or ETFs, one must not forget that too few people in Germany are still participating in the attractive returns of stock savings," agrees Bortenlänger, head of the stock institute. In other industrialized countries, the proportion of shareholders is in some cases significantly higher. In Germany, it was 20 percent in 2001, slightly higher than the most recent annual figure. In the USA, for example, the state is promoting old-age provision more strongly via the capital market.

The federal government must now "deliver", warns the institute. In fact, the governing coalition wants to break new ground with a "share pension": Because millions of baby boomers are putting social security funds under pressure when they retire, the SPD, FDP and Greens want to use billions in public funds to build up a capital stock, from the income of which pension contributions and the level of pensions are to be stabilized in about 15 years. The stock institute also calls for tax exemptions to make private share savings more attractive. The next few years will have to show whether such initiatives will convince stock market skeptics and continue to increase the number of shareholders in Germany.

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