Please note: this research was conducted in March 2018 and March 2021 and was accurate at the time of writing.
While investing could be a great way to build up your wealth, only a fraction of the UK population has taken the plunge. In fact, about 62% of Brits aren’t currently investing at all – that’s almost two thirds of the population1.
Given interest rates are currently so low, why is there a reluctance to give investing a try? In a bid to understand this inertia, we surveyed 1000 UK savers and here’s what we’ve found.
Why are Brits so reluctant to invest?
Our new survey has revealed a confidence gap among UK savers, with 3 in 4 (72%) saying they don’t feel confident enough to try investing their money2. And only 1 in 6 (16%) people with £5,000 or more already in savings, but no investments, had considered investing in the past twelve months, despite the majority (58%) having saved more since the start of the Covid-19 pandemic.
More than 1 in 3 (38%) people say they do not understand how investing works, and this isn’t helped by the language traditionally used in the industry, with 22% finding it too confusing3.
What’s more, those who aren’t confident enough to enter the investment world, say it’s because they are happy with how their cash savings perform (43%). And yet, with interest rates at a historic low, millions of people could be missing out on potential growth.
Lack of confidence is most evident among millennials (84%) and women (77%), with both groups admitting that “not understanding the process” led them to feel this way (53% and 44% respectively). And despite the increase in accessible financial educational content in recent years, 39% of millennials and 25% of women do not know where to go to learn more about investing.
Whilst robo-investors like Wealthify have helped democratize the industry, the investment world still battles against perceptions of exclusivity, with 54% of Brits stating that investing is not for people like them. And almost 3 in 5 savers (59%) admit they would “not know where to start”, despite the increasing number of available options, especially online.
Brits are struggling to think long-term
Surprisingly, 69% of savers surveyed say they do not have any long-term savings goals. However, 73% of younger people (aged 18-34 years) did specify having long-term savings goals, with 2 in 3 (66%) in this age group saving for a deposit to buy a home.
The Covid-19 pandemic may be responsible for driving a short-term outlook for many, with 59% of Brits saying they are currently only focusing on their day-to-day financial situation. More reassuringly, almost half (46%) of savers with no long-term saving goals are still putting money away for a “rainy day”, and a further 1 in 4 (15%) are saving for whatever might be “right around the corner”.
“The past year has been tough on everyone, both personally and financially for some. But it is important we don’t let that have a lasting effect on our future plans. Investing offers great opportunities to grow your money over the longer term, so it’s worth taking small steps now to consider your future goals and how you can achieve them.
“It’s frustrating that the complicated way investing is often still explained, and the perceptions of what an investor ‘should’ look like, are stopping so many savers exploring their options.
“At Wealthify, we aim to inspire anyone, regardless of their background or experience, to build their wealth and the future they want. It’s why we invite people to invest from as little as £1, and why we stripped away the complexity and jargon from day one. We want to make investing easy to understand, accessible to all.”
Andy Russell, CEO
Why consider giving investing a try?
Investing may be a great way to give your money more potential. The top drivers for people who had considered investing were low-interest rates on cash savings (47%), followed by money not growing as much as they had hoped (35%).
With investing, you could have the opportunity to build up wealth for your future and bring your long-term financial goals to life. However, before you take the plunge, consider getting your finances in order – if anything, the past year has taught us how important it is to be prepared for the unexpected. Once you’re in a good place financially, you might want to explore all your options to try and make your money work harder.
1: Wealthify ISA survey. Research conducted by Opinium Research between 9– 12 March 2018 amongst 2,010 consumers
2: Opinium survey, 19th – 25th March 2021, 1001 UK adults who have £5,000 + in savings and not investments
3: Confidence gap:
Past performance is not a reliable indicator of future results.
The tax treatment depends on your individual circumstances and may be subject to change in the future.
Please remember the value of your investments can go down as well as up, and you could get back less than invested.
Wealthify does not provide financial advice. Seek financial advice if you are unsure about investing.