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56% of investors cite “living the lifestyle I want in retirement” as a primary investment goal, reveals research by Janus Henderson

As UK inflation reaches its highest rate in 30 years, UK investors approaching retirement are divided on how their investments will be impacted by a sustained period of inflation, and the steps they should take to mitigate those effects.

New research carried out by Janus Henderson Investment Trusts as part of its ‘Big Five Oh!’ retirement campaign found that investors nearing retirement age perceived inflation as a greater threat to their investments than their younger counterparts. Older investors were also found to have made fewer changes to their investments in response to inflationary pressures than younger investors.

The ability to live comfortably in retirement was found to be a primary goal amongst all UK investors which may go some way to explain why those approaching retirement age are more wary of the inflationary environment than those nearer the start of their investment road.

Notable data points:

Expected impact of inflation:

  • Impact 38% of investors aged 55+ expect the UK’s sustained period of inflation to have a negative impact on their investments. Younger investors are more concerned, with 42% having that opinion
  • Both new and seasoned investors are split in what inflation means for their investments. Among new investors, 27% think it will be positive compared to 39% that think negative, with the corresponding data for seasoned investors 28% and 34% respectively.
  • Looking at those with a different investment approach, the figures once again show a similar divide. 30% of ‘risky’ investors are positive about inflations’ impact while the same can be said for 26% of those that take a ‘conservative’ approach
  • Those investors that invest in collectibles and NTFs are the most optimistic, with 45% and 44% positive about the impact that a period of inflation will have on their overall investment portfolio

Changing strategy:

  • The looming impact of inflation has galvanised 30% of investors into making changes to their investment strategy to manage its effects. But it is those aged 55+ that are found to be the least likely to have made changes (22%) – and just a quarter (24%) of those heading into retirement (aged 55-64) have done so.
  • Furthermore, almost half (48%) of those 55+ have not just declined to make changes, they also have no plans to do so
  • While the same percentage of men and woman are yet to make changes, female investors are notably more likely to have plans to do (29% of men vs 37% of women)
  • Younger investors are more active in making changes, with half having done so (50%) and a further 32% planning to do so

Investment Goals:

  • 56% of investors cite ‘living the lifestyle I want in retirement’ as a primary investment goal

James de Sausmarez, Director and Head of Investment Trusts, Janus Henderson comments: “UK investors are all facing the challenges of an inflationary environment and, regardless of age or experience, the ability to live comfortably in retirement is a clear priority. The research shows that those nearing retirement age are more concerned about the risks inflation pose, perhaps because they recognise that their planned income streams will need to grow at least in line with inflation if the real value of their retirement income is to be maintained. They are the least likely group to have made changes in response to the current environment as their investment portfolios may be positioned for their retirement needs. Conversely, younger investors, who have more flexibility and can take a longer-term view, were found to have been more proactive in making changes to their investments in direct response to the present circumstances.

With interest rates so low, holding cash or cash equivalent investments will not protect against the current inflationary environment. Equity based investment vehicles such as investment trust companies are better able to do so as they offer the prospect of both capital and income growth. Investors who are uncertain about what to do should consult a financial adviser or other authorised intermediary.”

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