Investment habits of Latvian, Lithuanian and Estonian citizens

Investment choices of Baltic residents generally differ – although residents of all three Baltic States prefer investment in real estate, Latvians prefer not to invest any of their free funds at all. Even if they had free money, they would rather deposit it non-profit bank accounts or deposits, according to results of a survey conducted by Citadele Bank.
At the same time, 3rd level pension programmes and life insurance with savings are investment options that seem more attractive for Latvian residents than Lithuanian and Estonian residents, according to results.
The investment choice of Latvian residents if they had free money: 43% would invest in real estate, 24% would pick savings accounts and 23% would pick a normal account, another 23% would pick 3rd pension level, 17% would pick life insurance with accumulation, 16% would invest free money in local and international company shares.
The survey also reveals different approaches for investments in different age groups. Youngsters prefer cryptocurrency, while residents of other age groups prefer to invest in 3rd pension level.
For example, 23% of young people aged 30 years would rather invest in cryptocurrencies as opposed to 6% of 40 to 49 year old residents.
Investments in 3rd pension level are the next most popular choice after real estate in all age groups above 30 years. This is especially true for residents aged 50-59 years. Men aged 40-49 years prefer to invest in gold – 18%.
«Although investments in real estate are the most popular, this option is difficult for most residents because major savings are needed to afford real estate. Another option is taking a loan. We are happy that the 3rd level pension is a popular choice among residents. However, residents could use it to its full potential if they think about sooner than reaching pre-pension age,» says Citadele Bank subsidiary CBL Asset Management board chairman Kārlis Purgailis.
He continues: «For example, 3rd level pension or life insurance with accumulation are more accessible because unlike investments in real estate, it does not require considerable capital, rather residents are able to accumulate finances by diverting small amounts every months.»
«When compared to Latvia’s neighbouring countries, residents are slower to use investment options. Most residents still prefer to not invest their money.»
Purgailis adds: «We can see residents choose to invest in savings accounts twice as more often than business or company shares. This creates concerns, because it is an irrational choice – to preserve and multiply saved capital, it should be allowed to work and invest it. The activity of Estonian residents on the share market is affirmed in everyday observations. For example, most investors in the initial public offer from Latvian energy company Virši came from Estonia.»
Lithuanian and Estonian residents most often decide to invest their free funds into real estate – 50% of respondents in Estonia and 43% in Lithuania.
Residents in Lithuania are less eager to keep their free finances on savings accounts than residents in Latvia – only 10%. The option to invest in international and local company shares is twice as much more attractive for residents in Estonia than residents in Latvia and Lithuania – 28% would pick this option. Estonia also seems to have the biggest support towards investments in investment funds offered by banks – 15% of Estonian residents and only 8% of Latvian residents would pick this option.
At the same time, the biggest support for investments in 3rd pension level is found in Latvia: residents there pick this option almost three times more often than residents in Estonia, where this option seems attractive to only 8% of residents.
The survey was conducted by Citadele Bank in cooperation with Norstat in November. 1 000 residents aged 18 to 74 were interviewed in each Baltic State.