Savings, more ‘ants’ due to Covid: What a consultant can do
The propensity to save has increased with the spread of the epidemic, and the perception of risk indicates that the trend will not reverse for some time
According to data from the Bank of Italy’s extraordinary survey of Italian families, 39% of households increased their savings in 2020, nearly 10 points higher than in the pre-pandemic period.
Data suggest that fears of new epidemics may increase the propensity to save for the long term
Meanwhile, it is the families who, above all, accumulated more savings, have “afforded” it: this opens the door to a rational analysis of how much more emergency funds are necessary. In this, consultants will be able to make a contribution
Covid-19 has made Italian families more wary, who have put in more money to protect themselves from the uncertainty of the future. But the “savings de-accumulation” set aside in 2020 may be slower than expected, as the traumatic experience of the pandemic could have long-term effects on spending habits – and possibly investment habits as well. In this scenario, clients who are assisted by a consultant will be able to count on a more “impartial” opinion about how much additional cash it is really necessary to put aside, in the given situation. The data, in fact, show that much of the savings accrued not among the financially hardest hit families, but “among those who can afford it.”
Savings the role of the epidemic
According to what they claimed Three economists from the Bank of Italy, in an analysis that first appeared in VoxEuThe pandemic has reinforced the precautionary attitude of families which has also affected their perceptions, for example those of the risk of a new epidemic. They added that these fears for the future “could remain ‘scars’ of the crisis, even after the health emergency is over.” The thesis of the authors, Valerio Ercolani, Elisa Guglielmenetti and Concetta Rondinelli, is this: A more pessimistic view of economic and health prospects is associated with a more consistent desirable precaution. As Covid-19 has raised new concerns among the population, it is easy to imagine that the share of income allocated to “emergency” savings will remain above pre-pandemic levels for some time. This will slow the recovery in consumption, and also suggest an influx of investments and a speed of recovery.
savings figures in Italy
According to the data of the extraordinary survey of Italian households conducted by the Bank of Italy, 39% of families interviewed between the end of February and the beginning of March 2021 declared that they had accumulated savings in 2020, which is about 10 points higher. The authors said about before the pandemic. Furthermore it, The proportion of households expecting to increase their savings increased by six points, from 2020 to 2021, to 45%. This proposal also affects the latest data on bank deposits, published by ABI: liquidity on deposits last June amounted to 1,781 billion euros, an increase of 8.9% compared to the previous year.
Therefore, Italians continue to amass savings – perhaps because they are not at all convinced that the worst of the pandemic is now behind us. Actually, “A third of families surveyed between late February and early March believe the current pandemic will last at least until 2023The three Bankitalia economists found, “On average, they attributed a probability of about 50% to the possibility of trying one more in the next 10 years, a high value when compared to historical evidence.” Moreover, 85% of respondents admitted that their ratings were affected with Covid-19.
The consequences of these expectations can have long-term consequences for savings. As expected, the Bank of Italy survey confirmed that the desirable precautionary saving is “significantly higher for those who believe that the health emergency will last for a long time and for those who believe that a new epidemic is very likely in the next ten years”.
Who can save
In general, the emergence of Covid has increased the risks of economic fallout for families not only in perception, but also in facts. Only on July 15thWorld Health Organization He emphasized not only that “the epidemic is by no means over”, but also that new variants “may be more dangerous and more difficult to control” could emerge “with a high probability” than those already known.
However, not only or not many of the subjects most exposed to the economic risks of the ongoing crisis stage may have adjusted emergency funds. “The results show that the probability of saving in 2020 is higher for those who report higher desirable precautionary savings and for those who fear contagion, while it is lower for cash-strapped families,” the three economists at the Bank of Italy explained. They continued, “The dynamics appear to be driven by two contradictory forces,” on the one hand, there is a group of financially difficult families who wished to accumulate (prudential) savings but did not have the resources to do so; It will lead to more people who can afford it.”
to me financial consultant It would not be difficult to distinguish between the two cases described above. In particular, some questions may arise for families who have been able to afford to accumulate more cash. For example, how realistic are the risks of negative income repercussions caused by the epidemic (given the sector in which the subject operates, etc.); And again, what is the most appropriate size of the safety stock in liquidity, given the expected expenses and revenues (is it already sufficient or should it be replenished?). In short, a further increase in Italian households’ propensity to save may not be the most efficient option for all—particularly given that savings would not have increased among the households that needed this saving the most.
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