Traditionally, Spanish investors have been conservative, although in the 1990s, with successive interest rate cuts and numerous IPOs of public companies, Spaniards have been moving closer to the financial markets.
Currently, according to a study on Spanish investors conducted by Deutsche Bank between April 2001 and April 2002, Spanish investors remain conservative—only 8,1% invest in risky securities, while the total investing population represents 21,4%. However, despite the limited interest of Spanish families in the stock market, they own 30% of all shares listed on the Madrid Stock Exchange.
Investment in higher-risk products (equity and mixed-income securities and funds) is unevenly distributed across the country. The Madrid metropolitan area has the highest concentration of investors opting for these products, with 12,3% of investors choosing them. Furthermore, according to the latest study by Carbó, López del Paso, and Rodríguez Fernández (Cuadernos de Información Económica, no. 167), the Spanish capital has the highest ratio of loans per capita, demonstrating the correlation between a higher level of risk taken when investing and the greater business anxiety that arises from the need for financing.
In the north-central area, risk values also have great acceptance and 11,7% opt for these products.
Conversely, the Levante and Southern regions tend to opt for safer products. In the Levante region, only 6,8% invest in stocks or equity and mixed funds, and in the South, the figure is 4,6%.
The aforementioned Deutsche Bank study shows that the 35-49 age group continues to invest the most in equity and mixed funds and is therefore the most risk-tolerant, followed by the 25-34 age group. The 18-24 age group, although representing only a small percentage of investors (3,5%), is already investing in products with a higher risk tolerance. Of the total investing population, 60% are men and 40% are women. "The study demonstrates that men's risk tolerance (11.7%) is almost double that of women (4,8%)," says Luis Barcelona, National Director of Private Banking at Deutsche Bank.
As a consequence of this risk aversion among Spanish investors, the primary factor in choosing a bank, even more so than fees, expenses, and expected returns, is the trust and security that the institution inspires. Furthermore, "investors also value personalized service," says Barcelona. This explains the advertising campaigns aimed at small investors being run by brokerage firms and agencies like Renta 4, which offers "the stock market close at hand" and compares it to the ups and downs of married life, a farmer who, faced with inclement weather, hesitates about whether it's the right time to harvest, or a homemaker preparing a perfectly balanced shopping basket for a "Mediterranean diet." Fimatex, for its part, sometimes makes it seem like "child's play," while at other times it aims to offer the same security a baby would have in the womb.
Unlike six months ago, when investors primarily sought short-term gains, in April of this year Spanish investors are investing primarily for long-term profits. 50,8% want to obtain short-term gains, compared to 56.2% in October of last year. Thus, long-term savings now exceed short-term savings by 10 percentage points, indicating a change in behavior that could be driven by the different emotions investors feel when winning or losing money: they are more affected by the pain of losing money than by the pleasure associated with gaining the same amount. This leads investors to hold onto losing investments for longer than necessary, but also to sell shares too quickly, not because the prices have finished rising or because they want to use the money for something else (buying a car, renovating a home, etc.), but because they want to secure a profit, even though—and here lies the paradox—they reinvest in other shares hoping to repeat the process. If a transaction goes wrong and cannot be sold at a price higher than the acquisition price, it is simply kept in the portfolio and the maturity of the investment is changed: from short to long term.
Overall, 38,5% of the investing population does so for tax reasons, the fifth most common purpose, which explains the extraordinary development of pension plans, also favored by increasingly favorable tax treatment.
The study shows that deposits have been the safe haven for investors aged 25 to 34. In April 2002, 22.3% of investors opted for this product, 14 percentage points higher than the previous April, which saw 8.1%.
The study also highlights that investors prefer to make their own investment decisions (59.5%). This explains why Selftrade, in its advertising campaign, warns large shareholders about the arrival of a large group of small investors, whom it portrays as "financial sharks," and encourages them to trade independently: "A doctor, if ill, cannot operate alone; they need a colleague to perform the procedure. But an investor, just as they don't need anyone to go to the bathroom, doesn't need anyone when trading," the financial institution explains.
This contrasts with investors in investment funds who consult with others before making decisions, even when these products are managed by financial institutions. Nearly 50% of investors in these types of products seek advice or consult with a third party.
Two-thirds of Spanish investors (62.8%) contact their bank solely through a branch – 8.6% less than a year ago. The study shows that Spanish investors currently use different channels. However, "alternative channels will be increasingly used by the public, and in the last year, the use of a combination of telephone, internet, and branch visits has risen from 25,1% to 35,4%," says Luis Barcelona.
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