Why do Italians save but not invest?
The latest Consob report, the poor attitude of citizens to investing, also linked in part to the lack of economic education.
In fact, the data collected shows that citizens’ financial knowledge is not yet sufficiently widespread either with respect to basic concepts or financial instruments.
Even the Acri-Ipsos report, released on 30 November 2023 on the occasion of World Savings Day, shows that (although the trend is growing) today only 36% of Italians choose to invest and, when they do so, they put the security first.
In fact, we Italians historically tend to save with commitment and perseverance, but then we are not always able to make the money set aside “work” for us.
Let’s look in detail at the reasons for this lack of propensity to invest.
The few skills
The limited aptitude for investing is often linked to a sense of inadequacy with respect to financial issues and an actual lack of skills.
For example, very few people have the knowledge necessary to understand that inflation erodes purchasing power and that, consequently, the money left in the account is destined to decrease in value over time.
Furthermore, even when we realize that investing would be advantageous, we end up not doing it anyway because we feel incapable of making the right decisions: the economy and finance always seem too “distant” and out of our reach to be able to manage them peacefully.
The fear of losing money
Often the fear of losing even a small sum of money is stronger than the desire to have a good economic return thanks to a thoughtful investment.
We take it for granted that keeping our savings in a current account is a safe choice, but this is not the case: in the best case scenario, they will yield us nothing and in the worst case scenario, they will lose value over time, due to inflation.
The status quo bias
As behavioral economics teaches us, when we have to make financial choices we often do not act on the basis of rational thoughts, but are influenced by numerous cognitive biases.
In the case of the tendency not to invest we may well be conditioned by an automatism called status quo bias.
It is a common mechanism, which pushes us to stay in the situation we already find ourselves in, out of habit or because the change is perceived as a fatigue, rather than undertaking something new, even if potentially advantageous.
To find out more on the topic of cognitive biases related to money management you can read our article dedicated to the relationship between money and psychology or listen to episode 7 of the podcast “Mica solo parole” with the economist Luciano Canova.
The fear of investing can be overcome
A good strategy to overcome the fear of investing is to take small steps: you can start with a careful analysis of your financial and asset situation to establish the amount to invest.
It must be an amount that does not make you uncomfortable and does not have a strong impact on your general situation.
The goal is to “forget” the money invested, in the knowledge that even if you were to lose part of that money, there will be no major repercussions or lifestyle changes.
In this way you can “train” in investing, without getting caught up in the anxiety and fear of losing control of your money.
It may also be useful to put this simple exercise into practice: let’s analyze the bank statements for the last 5 years and evaluate income and expenditure by carefully analyzing expenses.
We will thus be able to realize that, over time, the actual value of money decreases.
Having an idea of the trend in purchasing power helps to understand that keeping savings in the account means letting them be worth less and less.
Seeing this evidence first-hand makes the choice to invest simpler and more natural.
Furthermore, the more you become familiar with economic issues and take a concrete interest in the state of your finances, the more you gain confidence in your ability to choose and invest and you feel ready to turn to a consultant who advises you and guides you in the most suitable choices.
If you want to immediately start experimenting with correct money management and test your skills, visit the Museum of Saving website and find out more about our blog.