A delve into the nation’s savings habits finds almost two-thirds (62%) of UK adults are throwing away the chance of growing their wealth by putting their savings in cash only.
The research from Selftrade, one of the UK’s largest investment and share-dealing platforms, shows that while 89% (45 million) of UK adults have some form of savings, £735 billion sits in cash.
People are even more likely to keep savings in their current account than in traditional savings products. Nearly two-thirds (61%) of people use current accounts for their savings, 56% using taxable savings accounts and 43% use cash ISAs. A further 16% shun any chance of return by keeping money in a piggy bank.
Richard Donegan, Director, Selftrade has commented: “While having a cash buffer is important to meet immediate spending needs, a huge number of savers are missing out on growing their wealth by keeping far too much money in the bank on low rates.
“With savers facing their eighth year of rock-bottom interest rates and poor returns on savings and Cash ISA products, we would urge them to consider better investment alternatives. The recent announcement from the ECB that it has cut its main interest rate from 0.05% to 0% only highlights this as a vital move for consumers to make.”
Just one in four (27%) people hold investment products and only 10% are sheltering their investments from taxman by using a stocks and shares ISA.
Risk is the primary reason (36%) for people who plan to keep their money in cash, not planning to put their money into investment products, while a quarter (25%) say they are put off as they don’t understand the stock market. One in six (17%) say they are worried about market volatility.
Richard Donegan continues: “Things don’t look like they are getting better for cash savers anytime soon. And while there is a risk associated with investing in the market returns can be far more lucrative.
If you are looking at the stock market for the first time don’t be put off by recent market conditions. No one can predict with any degree of certainty which way the stock market will move at any given time; but history shows that if you are investing over the long term, shares (or equities) are one of the best long-term investments in the financial market place. They tend to outperform government bonds, corporate bonds, property and many other types of asset, most particularly cash”.
Following the end of the tax year this week, Selftrade has come up with some top tips for investors looking at stocks and shares ISAs.
Richard Donegan explains the key points to consider when investing in a Stocks and Shares ISA:
- Understand your goals – do you want income or capital growth? Are you investing for the long term or short term? These answers will help you understand your risk tolerance and inform what you invest in.
- Understand what you are investing in - read the prospectus for funds and ETFs; check out the news and analysts’ views on stocks to help you understand the business it is in and the risks it might face.
- Think about the best products for you - if you are new to stocks and shares ISAs – ETFs and Tracker Funds can be an easier way into the market, spreading the risk across a basket of companies and giving you the return of the market it is tracking e.g. the FTSE100 index of the UK’s biggest companies.
- Invest in what you know – a retailer you use that gives good service and always seems to be busy or a company related to your job so you know about the opportunities and risks in its sector.
- Spread your risk – don’t put all your eggs in one basket – diversification is key as you risk the possibility of profits halving overnight if you choose to invest in just one company.
- Make a game plan – set a target price and use stop losses to cut your loss if it goes wrong or to lock-in profits.
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Notes to Editors
Research conducted by Opinium Research and Selftrade, 16th to 19th February 2016. Number of respondents: 2,001 UK adults.
Selftrade used data from the YouGov survey and population estimates from the ONS to calculate that an estimated £735 billion sits in cash.
Further information about Selftrade Stocks and Shares ISA
Our Selftrade Investment Platform offers you a flexible choice of investments and account types. Choices that fit your circumstances today so you can plan for tomorrow. Choose from over 8,000 shares, Exchange Traded Funds, bonds, funds and other assets spanning both UK and international markets, all available within a Selftrade Stocks and Shares ISA.
About Selftrade and Equiniti
Selftrade is an online investment and share dealing platform which gives access to an extensive range of shares and investment products and is a go-to resource for people looking to understand, plan and make investment decisions.
Since we started over ten years ago we have built a reputation for operating on the basis of open, transparent pricing.
We offer an extensive choice of investments, with our customers benefiting from over 8,000 shares, Exchange Traded Funds, bonds, funds, investment trusts and other assets spanning both UK and international markets, all available within a Selftrade dealing account, ISA and SIPP.
Selftrade was acquired by Equiniti 12 months ago. Equiniti keeps things running smoothly behind the scenes and provides sophisticated technology, administration, processing and payments services to well-known brands and public sector organisations in the UK.
Our services are delivered by 3,500 employees across 29 office locations, enabling us to offer solutions that are flexible, adaptable and scalable.
We are acknowledged leaders in the pension services market and in the share registration market, where our clients include around half the FTSE 100.
Our mission is to make the complex simple.