Investing can be a great way to grow your money for the future. A long-running Barclays survey1 shows that over any 10-year period in the past 115 years, stocks and shares have produced higher returns than cash 90% of the time. But, as our own recent survey of 2,152 Brits discovered, there’s more to investing than just the potential for financial returns!
Feeling the buzz
74% of the investors taking part in our survey said they get a ‘buzz’ when they see a return on their hard-earned money, equating the feeling most closely to bagging a bargain on the high street, going on holiday, or being promoted at work. One in six (14%) described the buzz they got as ‘massive’. The excitement of a good return outshone the achievement of losing weight for most investors, and one in ten even said the buzz was comparable to having sex, although men and women failed to agree on this point, with 15% of men and only 4% of women likening the two.
People’s investing experience can also depend on where they live in the UK, according to our study. Investors in the East of England (85%), Wales (83%), and London (79%) were more likely to report getting a buzz from pocketing a return, than their Midlands and Northern counterparts who tend to be slightly more philosophical about the experience.
Wherever they reside, seeing a profit appears to produce an adrenaline rush for most Brits, but what about more lasting psychological effects? In our survey, UK investors also cited getting real emotional benefits, reporting feeling in control (36%), satisfied (35%), secure (31%) and confident (20%) about their finances as a result of their investing habits. In contrast, only 6% of those surveyed reported being scared or confused, and just 8% said it gave them cause for worry.
We also asked people why they started investing, and whether they are achieving their objectives. Long-term goals such as saving for a comfortable retirement (44%) topped the list of reasons, but almost as many said they simply want to ‘make their money work harder’ (42%) indicating that investing is not always about having a clear goal in mind. Emotional benefits featured prominently here too, being a main driver for a quarter (24%) of respondents, who said investing helps them to feel more in control of their finances. A fifth (18%) said they were simply investing in the hope of getting inflation-beating returns.
Goals are all well and good of course, but what about outcomes? Our research found an encouraging number of investing Brits are already enjoying the fruits of their endeavours, with a quarter (24%) of those investing to make their money work harder saying they’d already achieved their goal, along with more than a fifth (22%) of those investing to generate more income.
Investing struggles to seduce Brits
Despite the clear emotional benefits, and the ease and affordability modern digital investment services offer, our survey found that almost two-thirds (62%) of Brits still aren’t currently investing at all. Equally concerning is that investing is way down 95% of non-investors’ priority list, far below household chores (54%), a regular check up at the dentist (34%) or even DIY jobs (22%).
It’s not that Brits aren’t concerned with their finances, either. In fact, our survey highlighted how hands-on Brits can be when it comes to managing their money. 59% of non-investors put managing finances as a top three item on their to-do list, ahead of booking a holiday (27%) and planning a date night with their partner (9%). Considering that it’s no secret that most cash savings products have limited potential for inflation-beating returns these days, and if Brits really are on the ball with their finances, what exactly is it that’s putting people off investing?
You’d be forgiven for assuming that risk is the main hurdle for most first-time investors, yet only one in five people (19%)2 say it’s the main thing holding them back, just slightly more than the number of people worried about their limited understanding (16%) of the subject. In fact, the standout issue for non-investors, according to our research, is still that people think they don’t have enough money to invest (33%), a debatable concern given the technology-led democratisation of investing seen in recent years.
As co-founder and CIO of Wealthify, Michelle Pearce, explains, it appears there’s still much to do to convince sceptical Brits that investing is not just for the super wealthy, and open their eyes to the potential opportunities that investing can offer.
“Given today’s low interest and high inflation environment, it is encouraging to see that over a third (35%) of Brits invest. However, it’s disappointing that investing falls so far down the list of priorities for the vast majority, and that just 2% of people say they’ve put money into a Stocks & Shares ISA for the first time in the past twelve months2.
“As well as the potential financial benefits non-investors could be missing out on, this research highlights the clear emotional benefits to be had with investing. Far from the unexciting and tedious experience many people might expect, it seems that making your money work hard can give you a real buzz, comparable to going on holiday or bagging a bargain.
“It’s most surprising, and concerning, that so many people still seem to be held back by common misconceptions around investing, particularly given that since the rise of online investing services like Wealthify, most of these myths should be defunct. It highlights the need for much more to be done, through government and industry-sponsored education and information, to dispel these myths and empower people to feel confident enough to give investing a try.”
1 Barclays Equity-Gilt Study: Source Telegraph: https://www.telegraph.co.uk/finance/personalfinance/investing/11477122/Historys-lesson-for-Isa-investors-Barclays-Equity-Gilt-Study-2015.html
2 Wealthify ISA survey. Research conducted by Opinium Research between 9– 12 March 2018 amongst 2,010 consumers
Please remember the value of your investments can go down as well as up, and you could get back less than invested.