Low propensity to invest and aversion to risk have always been the distinctive traits of the Italian saverThe latest news confirms this. Moneyfarm investigationan independent financial consultancy firm with a digital approach. According to which 52% of Italians with bank accounts have not made any investments in the last four years, contributing to the increase in the share of liquidity sitting in current accounts and exposed to the erosive power of inflation, which, at the end of 2023, amounted to a whopping 1,151 billion euros. Of the 48% who declare they have made at least one investment from 2020 to today, the vast majority (75%) have opted for direct or indirect bond investments. The picture changes radically among those with assets exceeding 50 thousand euros: investors go from 48% to 80%.
“Italy remains at the bottom of the OECD list for financial literacy levels and this has a tangible impact on the investment habits of savers. A good part of the huge amount of liquidity parked in the current accounts of Italian families –
commented Andrea Rocchetti, Global Head of Investment Advisory at Moneyfarm – has been shifted towards deposit accounts and bonds, especially government bonds, instruments that in themselves have very interesting characteristics, but which must be inserted in the context of a diversified investment strategy that is appropriate to the risk profile and needs of each individual. Unfortunately – as the Consob report on the investment choices of Italian families reminds us and as confirmed by this survey of ours – to date, few people are aware of the characteristics and especially the risks of investing in bonds. For this reason, we always suggest that savers turn to a professional consultant for informed management of their assets. Families assisted by a professional hold, on average, a more diversified portfolio”.
Bonds, 4 out of 5 investors don’t know how they work
Investing in government bonds or bonds issued by large companies it is perceived as safer of equity investment by 51% of the sample. The first concern associated with fixed income is linked to market risk: as many as 55% of respondents fear being forced to sell the security before maturity at a lower price than the purchase price. Other objective risks of bond investment, such as the risk of insolvency of the issuer and the reduction of the competitiveness of the coupon due to the increase in rates, are at the top of the concerns of only a minority, respectively 26% and 23% of the sample of investors. To make us reflect even more, also in view of the path of rate cuts that is expected from the ECB, is the fact that the vast majority of respondents (77%) are unaware of the mechanism underlying bond investment: 4 out of 5 investors do not know the correct answer to the question “What happens to the value of a bond when the interest rate set by the ECB falls?”. Specifically, 31% of the sample are completely unaware of the price-yield variation ratios in relation to the official variation in rates and 46% give the wrong answer (“The value of the bond remains unchanged” or “The value of the bond falls”).
31% of investors declare having subscribed to BTP Italia or BTP Valore
If the relatively low level of risk explains the attraction of Italians towards fixed income, the guarantee of the Italian State, the periodic coupons and the preferential tax rate certainly also contribute to incentivizing investment in government bonds. A recipe that, seasoned with a pervasive media campaign, has determined the recent success of the Btp Valore, the Treasury bond aimed at retail savers launched in June 2023 which in less than a year has raised a total of 65 billion euros. 31% of the sample interviewed by Moneyfarm declared having subscribed BTP Italia or BTP Valore and more than half of these subscribers say they were influenced by the massive communication campaign that accompanied the issue, so effective that only 15% of those interviewed said they had never heard of these instruments.
The more we probe the ground of knowledge, the more alarmed we should be.
The majority of the sample does not have a clear understanding of the differences between government bonds and §°_i.e. securities issued by private companies (mostly banks and industrialists) to finance themselves. In fact, 82% mistakenly believe that government bonds are easier to sell than corporate bonds, 38% think that government bonds have lower average returns than corporate bonds and 46% are unaware that the latter are associated with greater risk than government bonds. Alarmingly, diversification is important for only a third of the sample (35%), while many believe that investing in a single bond is an equally valid approach (19%) or even better (12%) and very many (34%) have no opinion on the matter.
Less than half of respondents know about bond taxation
In terms of taxation of capital gains from bonds, in fact, only 34% of the sample knows exactly the amount of the reduced rate applied to capital gains on government bonds such as BTP, BOT, CCT and CTZ, equal to 12.5%, and even fewer (20%) know precisely the effective rate of 26% applied to capital gains on corporate bonds. Familiarity with the tax regime reserved for bonds is growing among “affluent” investors: among those with an investable wealth of more than 50,000 euros, in fact, the percentage of those who know exactly the amount of the rates applicable to capital gains on government bonds and corporate bonds is equal to 55% and 42%, respectively.
If we look at the recent past of financial markets, 2022 was a particularly negative year for investors, who, however, can draw important lessons from history. However, over half of respondents say they do not know what happened on the stock or bond front. In particular, 54% do not know that in that year the value of government bonds in their portfolio fell by an average of 11%.
