Investment amounts in Lithuania are gradually increasing. According to the Bank of Lithuania, assets people in the country had entrusted to management by professionals totalled 4.15 billion euros at the end of 2016 and grew 16.8 per cent during the year. A recent survey of residents also confirmed investment is rising – it shows that the number of people in Lithuania who invest increased from 13 per cent to 16 per cent last year.
Moreover, the number of residents who allocate for investments bigger amounts grew somewhat during the year, and a rather large portion of people said they prefer long-term investments (10 years or more). These trends were revealed by a survey of Lithuanian residents’ investment and saving habits commissioned by INVL Asset Management, one of the country’s leading asset management companies.
“It’s great to see the steadily growing investment amounts and long-term outlook – that shows people are planning their finances more. The benefits of doing so are also confirmed by analysis of the return on investments, which shows long-term periodic investment helps grow assets and avoid more substantial loss of value as markets fluctuate,” said Vaidotas Rūkas, Chief Investment Officer at INVL Asset Management.
According to the survey, the number of people allocating 51-200 euros a month to investment at the start of this year increased compared with a year earlier when a survey was also conducted. The proportion of people investing 51-100 euros grew from 21 per cent to 32 per cent, and those investing 101-200 euros grew from 10 per cent to 15 per cent. The percentage of those investing 21-50 euros a month fell from 35 per cent to 21 per cent and those investing 20 euros or less decreased from 14 per cent to 9 per cent. The share of people investing 201-500 euros a month fell from 6 per cent to 1 per cent. In general it was men, those with higher income and residents of large cities who more often said they allocated bigger amounts to investment.
Among people who invest, this year 42 per cent said they invest for a period of more than 10 years, while 26 per cent said they invest for 5-10 years and 21 per cent for 1-5 years. In terms of their plans, 56 per cent of respondents said they do not intend to change the amounts they invest over the coming year, 15 per cent are inclined to increase and would rather increase the amounts they invest, and 6 per cent are inclined to reduce and would rather reduce them.
The main objectives for investing were unchanged: people invest hoping to accumulate a pension (49 per cent this year vs 50 per cent last year), to get supplementary income besides what they earn (44 per cent and 32 per cent, respectively), to pay for higher education for their children (21 per cent and 13 per cent), to buy a house or apartment (20 per cent and 14 per cent), or to buy a car (10 per cent and 7 per cent).
Among the five asset classes seen as reliable, most appreciated is investment in housing or rental housing, gold, pension funds and global equities. It’s interesting that people who invest have a much more favourable view of pension funds – 38 per cent of them think pension funds are reliable, compared with 14 per cent of those who do not invest. Residents of big cities more often named global equities as a reliable investment.
Over the last year, there was also some change in the attitude of people who do not invest as to what would be needed for them to start investing. Those who said that to start investing they would need higher income increased this year to 76 per cent (from 60 per cent last year), while more this year also said they want a guaranteed return on investments (23 per cent vs 19 per cent). But fewer people think they need a better understanding of financial markets (23 per cent vs 33 per cent). People from smaller cities and centres of the districts more often named higher income as a requirement, while a better understanding of the markets is more often what would encourage respondents with average and higher income to start investing.
Bank of Lithuania data show the total liquid financial assets* of the country’s households reached 18.6 billion euros at the end of 2016 and grew 8.1 per cent during the year. Assets entrusted to management by professional investors (pension and mutual funds and life and non-life insurance and annuity commitments) increased 16.8 per cent to 4.15 billion euros.
The largest portion comprised pension funds, with 2.57 billion euros, or 18.2 per cent more than a year earlier. Assets held in mutual funds totalled 0.48 billion euros and increased 17.9 per cent during the year, while life and non-life insurance and annuity commitments rose 13.4 per cent to 1.1 billion euros. The amount held in deposits at year-end was 11.9 billion euros, which was 5.7 per cent more than a year earlier.
The representative surveys of Lithuanian residents’ investment and saving habits were conducted on behalf of INVL Asset Management, in February of this year and last year, by the research company Spinter Tyrimai, which each year interviewed 1,011 Lithuanian residents aged 18-75.
INVL Asset Management is part of Invalda INVL, one of the Baltic region’s leading asset management groups. Companies in the group manage pension and mutual funds, alternative investments, individual portfolios, private equity assets and other financial instruments. They’ve been entrusted with over 520 million euros of assets by more than 180,000 clients in Lithuania and Latvia as well as international investors.
* Liquid financial assets of the country’s households include cash and deposits, life and non-life insurance and annuity commitments, mutual funds, pension funds, debt securities and loans, and listed shares.
Source: www.lb.lt: The statistics of financial accounts, households.