Three in five (60%) UK savers avoid investing because they believe it’s too risky, according to new research from investing and trading platform IG. The study also found that most (51%) are unaware that cash savings can lose value over time due to inflation.
Conducted as part of IG’s Save our Stock Market campaign, the survey of 2,000 non-investors highlights the challenge the UK faces in changing perceptions of investing, with the country currently having the lowest level of retail investment among G7 nations.
Almost three-quarters (72%) of savers say disclaimers such as “Capital at risk. You may get back less than you invest” deters them from investing.
With the government recently launching a review of risk warnings on investments – the research suggests a more balanced approach could unlock millions of potential investors. More than a third (35%) of non-investors would consider investing if warnings explained both risk and reward.
Additionally 30% said they would be more likely to move money from cash to investing if cash accounts highlighted inflation risk. There is a lack of understanding, particularly among younger savers, of the impact of inflation on cash savings, with 11% of 18-34-year-olds believing that inflation only impacts investments, not cash.
IG is calling for regulators to enforce balanced and proportionate risk disclaimers across both cash and traditional investment products. Disclaimers should clearly outline both the risks and potential rewards, rather than emphasising only the negatives, with long-term cash savings explaining the impact of inflation in a clear, understandable way for consumers.
Michael Healy, UK Managing Director at IG, said: “We urgently need to change the perception of investing so more people in the UK can benefit from the long-term wealth-building opportunities it offers. One area we can address immediately is the way we frame risk for both cash and investments.
“The government is clearly focused on this issue and we welcome the recently launched consultation. We would encourage policymakers to be brave in driving meaningful change. Cash accounts should carry the same proportionate risk warnings as investment products, highlighting the real risk that inflation can erode savings over time. We also need to balance the risks and potential rewards of investing, rather than focusing solely on fear.”
