Deutsche Börse illuminates the path for uncertain savers

By: The WFE Focus Team Sep 2020

In Germany, in families and at school, there is too little discussion and consideration of basic economic principles, not to mention about investment decisions and opportunities in stock exchange trading. With little more than 15% of the population investing in shares and equity funds, Germany is a developing country in terms of equity culture. While the main levers are in the hands of legislators, private initiatives aim to improve the situation.

“I am almost 18 years old and I have no clue about taxes, rental and insurance. But I can analyse a poem. In four languages.” This tweet from Naina, a 17 year-old pupil from Cologne, brought a decades-old debate back into public view: general education among the younger generation in Germany suffers from a lack of guidance regarding financial know-how for everyday situations. More than five years after this tweet, too little has happened in Germany, in particular in the area of financial education at school. Economics occasionally appears on the curriculum, but only two of the 16 federal states have economics as a dedicated school subject.

If school is meant to prepare students for life, then an important aspect of this readiness is omitted: the idea that it is necessary to take mid- to long-term financial decisions quite early on – decisions that will literally pay off at a later stage in life. But a whole generation of school graduates is not in a position to take informed investment decisions, for example as part of their retirement planning. As our society ages and with savings interest rates close to zero in the Eurozone, this lack of know-how and concern about the future might backfire a few years down the road.

Few retail investors in Germany

Germany has had this problem for many years: in 2019 – a year in which the DAX® rose by more than 25 percent from January 1 to December 31 – only 15.2% of Germans participated directly or indirectly (via equity funds) in this wealth creation. The 2019 figures, as published by Deutsches Aktieninstitut (an association of German exchange-listed companies), reveal that the numbers have hardly improved in the last decade: in 2011, 10.2 million people (15.7 percent) held shares and equity funds. And this is despite compelling arguments. And yet, over a 20-year horizon, a broadly diversified share portfolio in the DAX® with a one-time investment produced an average annual return of 8.9 percent.

If German savers cannot estimate the opportunities and risks of engaging with the stock market, they will not get involved in equity trading. So it natural for Deutsche Börse to promote equity culture in Germany through various initiatives, including the promotion of financial education in the school system. Another part of the approach is to promote economic education through its own efforts: with its new Visitors Centre, opening in October 2020, Deutsche Börse aims at making the world of stock exchange trading more interesting and accessible to the broader public. Up to 100,000 visitors are expected each year. The exhibition is free and open to all visitors on every trading day, without prior registration.

The Deutsche Börse Visitors Centre will establish what was previously lacking in Germany: a place of education where stock trading can be discovered. With an emotional moment that will remain in the memory at the end of the tour: the view onto the famous Frankfurt trading room, the last in Europe where exchange trading actually takes place.

The exhibition is not a museum, but rather an interactive experience: virtual characters greet and accompany the visitors on their tour. Visitors can quickly identify with them because they respond to their needs, prejudices and fears: pupil Max does not yet have any idea about stock exchange trading and shares; student Elisa wonders whether the stock exchange can contribute to her retirement provision; pensioner Werner has recently invested more often in the capital market and would now like to experience the place where it all happens; manager Christian has already had good and bad experiences at the stock exchange; consultant Clara from New York does not understand why the Germans are so reluctant to invest in shares.

From savers to investors

A special eye-catching feature separates the exhibition: the “DAX curtain” made of blue light bars that trace the course of the German blue-chip index from 1988 to 2020. The first part of the exhibition is about education, the second about practice. Over a course of 20 waypoints, visitors learn more about the history, the basics and the products of the stock exchange and can playfully follow the path of an order, create a virtual portfolio of historical values and observe their development up to the current day.

The exhibition explains the basics of stock exchange trading and shows that getting started on the stock exchange is much easier than many assume. For all those who want to learn more after their visit, an extensive range of lectures is offered on site. Thanks to this broad offering, the decision for (or against) investing in shares and other securities should, after the visit, no longer be based on half-knowledge, but on a solid economic understanding. Poorly informed savers will thus become informed investors.