Too shy for stocks

Despite the recent boom on the Warsaw Stock Exchange (WSE), investing in individual stocks has not gained much popularity in Poland. Equities bought directly on the stock market account for less than 10 percent of all household savings.

"In the US around 40 percent of household assets are located directly on the stock exchange," Maciej Kossowski, an expert at financial advisory firm Expander, said. He explained that in the US, it pays to invest in equities, and it is nothing unusual that retired people have even tens of thousands of dollars located in equities.

Secure investment

In Poland the situation looks completely different. Low interest rates have resulted in a growing interest among clients in non-banking products, however, "the people who invest directly on the stock exchange are either very wealthy clients or students, who treat this as a game or a way to gain experience," Kossowski says. According to him, most middle-class and upper-middle-class Poles would rather go for the more secure investment funds.

On the other hand, those who invest on the stock exchange can buy recommendations in brokerage houses, which contain the stock broker's predictions that the investor can use when investing his savings. Wealthier clients can count on the stock broker's direct help and advice, but nevertheless the client performs his transactions individually and takes on all of the risk.

Fear factor

The risk factor scares most investors off, while the remainder - usually the wealthiest customers - use the services of asset management companies. "They have a big advantage for wealthier clients - they provide them with financial advisors who help the client create his own portfolio," Kossowski points out.

The head of the investment-product department at Mbank, Maciej Witkowski, explained that the bank recommends that its clients start with investment funds, as they are easier and allow the client to gain some experience. "After a few years they could move to Emakler, which is one step higher in the game," Witkowski explained. 

"The Emakler product is the most risky way of investing your money," he added. He also said that this product is usually chosen by the clients with high income, who have a certain knowledge of the stock market and who are not afraid to take the risk.

Under supervision

This is quiet different from the investment funds, where the client invests in pre-prepared portfolios and can only move between different fund management companies. Furthermore, with funds, the investment process is overseen by a risk management team. Asset management companies invest the assets in securities, creating portfolios which range from fixed income portfolios (investments in treasury bonds) for the clients with a more conservative approach, to stable-growth and balanced portfolios, which contain safe bonds as well as equities, to high risk portfolios solely comprising equities.