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About a year ago, Draghi released this report on European Competitiveness (https://commission.europa.eu/topics/competitiveness/draghi-report_en https://commissi

About a year ago, Draghi released this report on European Competitiveness (https://commission.europa.eu/topics/competitiveness/draghi-report_en https://commission.europa.eu/topics/competitiveness/draghi-r...). In it he says "A key reason for less efficient financial intermediation in Europe is that capital markets remain fragmented and flows of savings into capital markets are lower." I don't have data readily to hand (and Draghi probably mentions this in the report, I can't remember), but anecdotally based on what I hear from many of my European friends, Europeans basically keep their savings in bank savings accounts. That means that there is less investment capital floating around, which in turn means that the tiny fraction that finds its way into innovation is in turn greatly diminished. Europeans are dependent on bank loans for funding, and banks want to see assets as security for their loans. Policies like this would further disincentivize Europeans to invest in their own stock markets, further damaging the ability of Europeans to innovate.

itake 11mo ago
> Europeans basically keep their savings in bank savings accounts. USA is not much different. The wealthiest 10% of the U.S. population holds the vast majority of stock market wealth. Recent data shows this group owns around 90-93% of all stocks, with the top 1% controlling about half of the total household equity. Many people hold cash in savings to prepare buying a house, paying for a child's college and more. IMHO, there is also less short-term need to invest your money as an adult. If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market?
- clickety_clack 11mo ago
  That’s exactly the issue, there’s so many taxes and frictions that people don’t think it is worth it, and that’s one of the reasons why Europe is stagnating. Investment in business creates strong economies.
- Kirby64 11mo ago
  > If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market? Because parking money in a savings account essentially erodes its value over time due to inflation. It’s safer, sure, but it’s a safe way to be guaranteed to lose money over time. Equity investing is essentially the only way for savings to outpace inflation.
  - itake 11mo ago
    Not really? Inflation in europe is ~2.2%, which is about what HYSAs in europe offer. The value erosion isn't significant in the short term, especially if people spend most of what they earn. In your 20s and 30s, the time horizon for the cash is about 10-15 years (saving up to buy a house). In your 30s and 40s, maybe good time to have equity investments, but perhaps that extra cash just goes into the mortgage or college savings funds.
    - Kirby64 11mo ago
      If your money stays worth exactly the same in net present dollars, it’s effectively eroding in value compared to what you could be earning. 10-15 years is quite the long time horizon. You could easily be earning 7% real/10% actual in equity investing. Most recommendations I’ve seen discuss short term savings such as HYSAs for a house being more in the 5 year or sooner timeframe. Frankly, investing in equities in your 20s and 30s is easily the best time to do it. You let the compounding of growth happen over the decades, not so much later in life.
      - itake 11mo ago
        I get it... but im just explaining why people are doing what they do: choosing to hold cash over higher risk investments. Lack of education IMHO is a huge part. Crypto has way more education around how to invest than equities investment. If people are investing, many are choosing crypto. > Frankly, investing in equities in your 20s and 30s is easily the best time to do it. You let the compounding of growth happen over the decades, not so much later in life. I agree, but for many people in their 20s and 30s, there just isn't much cash left over to invest, especially in Europe with high taxes and mandatory social security funds and pensions.

itake 11mo ago

> Europeans basically keep their savings in bank savings accounts. USA is not much different. The wealthiest 10% of the U.S. population holds the vast majority of stock market wealth. Recent data shows this group owns around 90-93% of all stocks, with the top 1% controlling about half of the total household equity. Many people hold cash in savings to prepare buying a house, paying for a child's college and more. IMHO, there is also less short-term need to invest your money as an adult. If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market?

clickety_clack 11mo ago
That’s exactly the issue, there’s so many taxes and frictions that people don’t think it is worth it, and that’s one of the reasons why Europe is stagnating. Investment in business creates strong economies.
Kirby64 11mo ago
> If you're happy with your job and don't need the extra money (or risk), then why invest in the stock market? Because parking money in a savings account essentially erodes its value over time due to inflation. It’s safer, sure, but it’s a safe way to be guaranteed to lose money over time. Equity investing is essentially the only way for savings to outpace inflation.
- itake 11mo ago
  Not really? Inflation in europe is ~2.2%, which is about what HYSAs in europe offer. The value erosion isn't significant in the short term, especially if people spend most of what they earn. In your 20s and 30s, the time horizon for the cash is about 10-15 years (saving up to buy a house). In your 30s and 40s, maybe good time to have equity investments, but perhaps that extra cash just goes into the mortgage or college savings funds.
  - Kirby64 11mo ago
    If your money stays worth exactly the same in net present dollars, it’s effectively eroding in value compared to what you could be earning. 10-15 years is quite the long time horizon. You could easily be earning 7% real/10% actual in equity investing. Most recommendations I’ve seen discuss short term savings such as HYSAs for a house being more in the 5 year or sooner timeframe. Frankly, investing in equities in your 20s and 30s is easily the best time to do it. You let the compounding of growth happen over the decades, not so much later in life.
    - itake 11mo ago
      I get it... but im just explaining why people are doing what they do: choosing to hold cash over higher risk investments. Lack of education IMHO is a huge part. Crypto has way more education around how to invest than equities investment. If people are investing, many are choosing crypto. > Frankly, investing in equities in your 20s and 30s is easily the best time to do it. You let the compounding of growth happen over the decades, not so much later in life. I agree, but for many people in their 20s and 30s, there just isn't much cash left over to invest, especially in Europe with high taxes and mandatory social security funds and pensions.