© AFP
Luxembourg residents are increasingly turning to digital and traditional investments, driven by low interest rates, easy online access, and a growing appetite for financial independence among younger people and newcomers.
Private investments in funds, shares, and cryptocurrencies are becoming increasingly popular in Luxembourg. Market analysts forecast growth of up to 20% per year for mobile apps that allow users to invest online with ease.
The boom in digital investing is driven by several factors: greater access to smartphones and the internet, a marked rise in younger generations' interest in financial independence, the ease of accessing information on the subject, and the possibility of investing without commission on many platforms.
Low interest rates also play a role, as traditional savings accounts lose purchasing power. Financial expert Claude Arendt explained that after years of near-zero interest rates, the only real way to earn returns, or at least offset inflation, was to invest in the capital markets, whether in bonds, funds, or individual shares. This, he noted, remains largely the case today.
In addition to private apps, banks also offer investment plans for individuals. While no comprehensive figures exist for supply and demand in Luxembourg, banks have noticed a shift in local investment behaviour, with more people putting money into securities, as Claude Hirtzig, head of retail at the Luxembourg Bankers' Association (ABBL), explained.
He observed that many newcomers to the country prioritise investing over buying property, often because they know they may leave after a few years and prefer to make their money grow before moving elsewhere. Hirtzig also noted that younger generations are showing greater interest in investments than a few years ago, not just in traditional stock markets but also in cryptocurrency and other asset classes.
According to Hirtzig, the banking sector sees annual growth of 3–4% in this area and welcomes the trend. Across Europe, experts broadly agree that too much money remains parked in savings accounts rather than flowing into the economy, funds that could help meet challenges such as the energy transition or strengthening defence capabilities.
Competition from free investment apps
Globally, Luxembourg ranks 32nd for downloads of trading apps, according to Cognitive Market Research. The sums transferred from private accounts to such platforms are relatively modest, according to the ABBL, and local banks are not worried about competition from apps due to the country’s traditionally strong private banking sector. Around 15–20% of private assets in Luxembourg are invested in securities, Hirtzig estimated, although the exact share handled via apps is unknown.
The situation is different in neighbouring Germany, which ranks third worldwide for trading app downloads, behind the US and China. In such countries, banks have lost significant sums to online competitors, the ABBL noted.
Key considerations for investors
For those considering investing, Claude Arendt advises starting with some fundamental questions, such as how much risk investors are prepared to take, and over what time frame. Or, put another way, when will the money be needed. If investors need it in six months, it is better kept in a secure savings account. But if investors can set funds aside for five years and contribute regularly, patience is essential and investors should avoid being unsettled by short-term fluctuations.
Hirtzig and Arendt agree that both investment apps and bank services are generally considered safe. Even in the unlikely event of a bank or app provider failing, investors remain the legal owners of their securities, the ABBL stressed. However, one area where care is needed is taxation: potential investors should make sure they understand how returns on investments will be taxed before committing funds.
