Sweden: Siltanews – News Desk
Historically, the UK is much underinvested in equities. Just 8 per cent of Britons invest directly — the average across the G7 is twice that, while in the US it is four times higher. This is partly thanks to our love of property, but also down to a cultural predisposition towards cash savings.
And yet we know that cash is at risk from inflation, while stocks and shares have outperformed cash in nine out of 10 decades over the last century.
Setting limits by itself is unlikely to drive meaningful cultural change. However, a blueprint does exist for achieving it. From the mid-1980s, a series of government initiatives in Sweden led to Swedish equity markets becoming among the best capitalized in the world.
Today, around 80 per cent of Swedes are directly invested into equities funds. This has set a virtuous circle in motion; the typical saver has had 7.7 per cent compound annual growth on average over the last couple of decades, while companies — especially in high-growth industries like innovation and technology — have access to enviable funding levels.
The Swedish government did this through favorable tax treatment, a strong regulatory framework, improved financial education and — crucially — applying lighter restrictions on financial advice.
This is one thing that could be directly emulated here. Current advice rules — which rightly aim to protect customers — have the unintended consequence that banks can’t tell you when you are better off putting spare cash in a fund rather than a savings account. Our rigorous legislation, despite the best intentions, means all investing is seen as a specialized, perhaps risky, practice best left to professionals.