Ž. Mauricas: Lithuanians' level of accumulated financial assets is growing rapidly, but there is another problem

Economist Žygimantas Mauricas says that between 2019 and 2023, the financial wealth of Lithuanians will double from around EUR 10,000 to almost EUR 21,000 per person. However, he says, while Lithuanians have become strong mediocrities in terms of accumulated wealth, the level of investment of these funds is much lower than in many other European countries, as most of the money is held in cash or simply in accounts, which leads to a loss of a lot of passive income.

Žygimantas Mauricas.<br>V.Skaraitis photo.
Žygimantas Mauricas.<br>V.Skaraitis photo.
Daugiau nuotraukų (1)


Nov 15, 2023, 11:37 AM, atnaujinta Nov 15, 2023, 11:38 AM

„The net financial assets of the Lithuanian population have grown 2-fold over the past five years, faster than in many other EU countries. And the difference, which was enormous 20 years ago, when, for example, Italians were 20 times richer than we are, has shrunk to 3 times“, Ž. Mauricas.

„Lithuanians hold about 70% of their financial assets in deposits, accounts and cash, and only 30% in employment. He added that Scandinavians keep only 26% under the pillow while the remaining 74% are employed“.

The economist also presented comparisons between the financial wealth accumulated by the population of Lithuania and that of other European countries and how it has changed over the last 20 years. In 2003, Lithuanians had 24 times less wealth than Italians, 16 times less than the French, 12 times less than the Germans and 6 times less than the Greeks. However, by 2023, the financial wealth of Greeks and Lithuanians has levelled off, while Italians, Germans and French have become only 3 times more prosperous.

According to Ž. Mauricas, the net financial assets of Lithuanians are likely to continue growing. The current lag behind some European countries, he said, is a consequence of the Soviet occupation.

„The good news is that Lithuanian wealth will likely continue to grow. Because wealth takes time to accumulate, we lost much time in prison in the USSR. And indeed, wealth is 35% of the EU average, while our GDP per year is 70% of the average. He explained that we are generating a lot, but we have only recently started generating“.

At the same time, he pointed out that the reluctance to invest in financial instruments in wealthier regions, such as the Scandinavians, prevents people from catching up, so inflation eats up some of the value of the wealth they accumulate. He noted that until 2000, Lithuanians tended to invest in equities. Still, this tendency has disappeared, and nowadays, there is no longer a desire to invest in stocks, bonds, investment funds, or even to keep money on deposit.

„Interest rates in Lithuania are higher than the euro area average, but Lithuanians still keep €15.5 billion in direct accounts, while only €6 billion is held in deposits,“ he said.

„Before 2000, we invested heavily in shares. Later, shares became terra incognita (unknown area – ELTA). Now, bonds have high interest rates and are a good investment opportunity, which we don't do much of. We also do not see the benefits of investment funds. Only pension funds save us and maintain a certain level of investment“, the economist commented.

Lithuanians don't like investing in financial instruments but invest in real estate

Ž. Mauricas noted that Lithuanians with accumulated financial assets prefer investing in real estate (RE). He attributes this choice to a lack of trust in investment intermediaries and the false belief that shares are riskier than real estate.

„There is a bit of a misconception about the risks of property and shares. We hear arguments that share daily changes and that they wander. This is partly true because if we take 2 years, we will find periods where those returns were negative. But if we take 5 years, there are fewer periods; if we take 20 years, there would not be a single period of completely negative returns. You need more patience“, explained Ž. Mauricas.

Although the economist considers investments in real estate to be positive, he stressed that, especially during increased savings, such investments can push house prices and create economic bubbles.

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