Are you among the majority of Brits who didn’t consider investing last year?
A study shows that the majority of Brits did not consider investing between 2022 and 2023. Find out why, plus how financial planning could boost your confidence.
According to a study conducted by Wealthify, 52% of Brits did not consider investing any money at all between May 2022 and May 2023.
The study polled those who had more than £5,000 in savings, and revealed that:
- 85% of respondents preferred to keep their money in cash
- Only 20% of those aged 66 or above had considered investing in the year leading up to the study
- 50% believed the benefits of investing did not outweigh the risks.
Whether you’re still in your prime career years, approaching retirement, or already retired, investing could form a crucial part of your financial plan.
If you’re reluctant to invest, you may find it harder to grow your wealth and ensure you have enough to last your lifetime.
Keep reading to discover the main barriers to investing, plus how financial planning could break them down.
Several key barriers stop Brits from investing, including anxiety and a fear of being scammed
When survey participants were asked why they haven’t considered investing in the past year, here is how they responded.
Source: Wealthify
If you are concerned about investing and share some of the above worries, it may be heartening to know that you aren’t alone. But some of these worries may not be necessary – especially if you seek professional guidance.
Let’s take a look at a few of these reasons in greater detail and dispel some common myths around them.
A preference for cash
85% of respondents said that they preferred the safety of a cash savings account over investing.
As of 8 July 2024, that savers could place £5,000 in an easy access savings account with a maximum interest rate of 4.91%. After a year, the £5,000 lump sum would be worth £5,245.50.
It may feel like a secure option to guarantee a return of more than £200 in a year. However, over the long-term, cash is usually outpaced by equities when measured against one crucial component: inflation.
We’ve recently published insights into why inflation is such an important consideration for your long-term finances.
A study from Schroders found that any 20-year period between 1926 and 2022 would have seen equities beat the rate of inflation 100% of the time. Cash, on the other hand, had around a 60% success rate across most time frames.
So, while you could prefer a low-risk cash option for now, investing has historically been a more effective way to ensure your money is not eroded by inflation over the long term.
Scam fears
Scams are on the rise. Last month, we published the latest data on financial scams and encouraged readers to be very careful when navigating pensions, investments, and banking online.
With this in mind, it is entirely understandable that you might be worried about investment scams.
Here are three simple tips that could help to keep your money safe:
- Stick to well-known providers, avoiding social media offers or unsolicited “deals”
- Ensure your computer and smartphone have cybersecurity measures in place
- Take advice from a qualified financial planner while building your investment portfolio.
These steps could help remove any anxiety about fraud when you begin your investment journey.
Lack of investing knowledge
Here at Kellands, we understand that investing your money without much knowledge may be daunting. 70% of survey respondents cited their “lack of knowledge” as a reason they don’t invest.
Working with a professional could ease your mind, giving you all the education you need to make confident decisions. Over the long term, we’ll manage your investments on your behalf if you wish, taking any further stress out of the equation.
Worrying about not being able to access your funds
Investing is usually best suited to a time frame of several years. Yes, day trading is popular – but we believe in a more measured strategy that has historically produced more reliable growth.
If you cash in your assets before they have had a chance to grow over at least five years (preferably longer), you might raise your chances of losing capital. This might be why 69% of survey participants said worrying about being able to access their money was a barrier to investing.
That is where balancing cash and investments comes in.
Indeed, cash is an important part of any strong financial plan. Your cash savings may make up your emergency fund, enabling you to easily access a pot of money if something unexpected happens.
What’s more, a cash fund could be used to pay for occasional luxuries that sit outside of your monthly budget, such as a family holiday.
As such, when you’re building your investment portfolio, it may be wise to ensure you have enough in cash savings to cover emergencies and luxuries first.
That way, you can rest assured that your invested wealth won’t be needed unexpectedly, giving it a greater chance of growing over the long term.
Get in touch to build your investment portfolio with a leading professional by your side
Our award-winning firm of independent financial planners is here to ensure your investment journey runs smoothly.
While we can’t control what happens in the markets, we can manage your portfolio in a way that meets your appetite for risk, ideal time frame, and goals.
To learn more about investing with the help of a Kellands financial planner, email us at hale@kelland.co.uk, or call 0161 929 8838.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.