Germany: Wise Men Propose Offering Minors 10 Euros a Month to Introduce Them to the Stock Market

Instead of Monopoly or La Bonne Paye, Germany is thinking of a new way to introduce its youth to the concept of investing. The Council of German “economic sages”, a group of experts listened to across the Rhine, recommended on Wednesday offering 10 euros a month to anyone aged 6 to 18 to allow them to take their first steps in the stock market.

“One way to facilitate every young person’s access to the capital market would be for the state to provide every child between 6 and 18 years of age with 10 euros per month as a share in the fund,” write the five experts in their annual report. “The Germans invest relatively little in shares compared to other countries, we are a country of savers! To change this, we need to improve financial education, starting in school,” explained one of the experts, Ulrike Malmendier, during a press conference on Wednesday.

The estimated cost of this measure will be 1.2 billion euros per year. The shareholder culture, long in its infancy in a country that favors risk-free savings, has recently accelerated in Germany. According to the latest data from the German institute DAI (Deutsches Aktieninstitut), almost 13 million people invested in stocks, share funds or ETF certificates in 2022. This represents an increase of 830,000 stock savers in one year, with the growth particularly pronounced among those under 30 years of age.

Inspired by Israel

Five “economic wise men” – professors of economics, public finance or social economics – want to further contribute to this development and are building on the model implemented in Israel since 2017. birth of a child on his 18th birthday. In Germany, such start-up capital could be invested “in a standard product,” for example, in a “state pension fund,” wise people suggest.

Another proposal that risks not being popular with young people: in their 423-page annual report, the experts also recommend raising the legal retirement age “gradually” after 2031, adapting it to rising future life expectancy. According to experts, this reform could contribute to sustainable financing of the legal pension system as it aims to reduce the ratio between pension recipients and contributors.

The legal retirement age in Germany is currently set at 67 under a reform adopted in 2007 that will fully apply to the generation born in 1964, i.e. in 2031.

“Thanks to the consolidation of an automatic mechanism” linked to demographic facts, “political discussions regarding the adjustment of the retirement age should no longer be held on a regular basis,” say wise people. Such reform must also take into account hard work and people with health problems. Other European countries such as Denmark, Italy, the Netherlands and Portugal are already adapting legal retirement ages to life expectancy, they say.