Cash is king for investors
Looking at how current economic circumstances are affecting investors, the most common asset classes are cash savings (76%), stocks and shares (48%) and property (31%). Going forward just under half (45%) of the investors questioned said that they would be putting more money into their cash savings throughout 2022. Meanwhile, a further 32% said that they will be investing in more stocks and shares.
Elsewhere, other investors were keen to sit tight: 45% said that they would hold their position on cash savings, as well as stocks and shares throughout 2022, while the majority of property investors (61%) were keen to hold their position.
Here, the fact that central banks are starting to increase their rates and push ahead with quantitative tightening schedules, is worth noting. As monetary policy begins to ‘normalise’, consumers will likely find their mortgage payments rising, while existing debts will become more difficult to repay. In short, this could result in diminished profitability for companies; particularly with some investors putting more money into stocks, many could find themselves vulnerable to a sharp correction in stocks. Certainly, this is something that should be kept in mind as the Federal Reserve looks to hike interest rates four times this year, with the Bank of Canada and the Bank of England expected to pursue further interest rate increases.
Investors remain quietly confident
Although investors may not be convinced that they will emerge from the pandemic in an improved financial position, the majority are broadly self-assured about their ability to weather any storms.
According to the research, 70% said they were confident about their ability to manage their finances and investments in the current climate, while a third (33%) went as far as saying that the pandemic is an opportunity to invest in new and emerging assets that stand to thrive in the new normal. So, while it may be a rough road ahead, this is perhaps one reason to remain positive.
Giles Coghlan is Chief Currency Analyst, HYCM – an online provider of forex and Contracts for Difference (CFDs) trading services for both retail and institutional traders. HYCM is regulated by the internationally recognized financial regulator FCA. HYCM is backed by the Henyep Capital Markets Group established in 1977 with investments in property, financial services, charity, and education. The Group via its relevant subsidiaries have representations in Hong Kong, United Kingdom, Dubai, and Cyprus.
