Savers who lack confidence in stock markets could be harming their own long-term investment goals, research has found.
A lack of confidence among investors may be expected, given market volatility at home and abroad, but Ophir Gertner, co-founder of alternative investment company invest.com, has warned investors not to flee to cash with its “miserly savings rates” instead.
He said: “Many people fail to understand that leaving money sitting in a savings account is not a risk free option, especially now with interest rates at their lowest level since the Bank of England was formed 300 years ago.
“Day by day, savings are being eroded by a combination of inflation and the likelihood of negative interest rates on savings accounts.”
It’s alarming to see this level of aversion to asset classes such as equities which historically perform well over the long-term Ophir GertnerHe highlighted research carried out by data analysts 3GEM on behalf of invest.com, which found that out of 2,000 UK residents, the majority thought investing in equities was the most risky of all investments.
It received a four-and-a-half risk score out of 10, with 10 being the least risky, but other types of investment such as crowdfunding and peer-to-peer lending being considered slightly less risky, at 4.8.
Even though there have been warnings about property investment funds and house prices, particularly after the UK’s vote to leave the European Union, Britons are still convinced that property is one of the safest investments.
Mr Ophir said, however, the fear of investing may harm savers who strongly favour cash over equities, especially after 4 August, when the Bank of England base rate was cut to 0.25 per cent.
He said: “It is alarming to see this level of aversion to asset classes such as equities, which historically perform well over the long-term, especially in an environment where savings accounts don’t even come close to keeping up with inflation.”
His comments came as a poll carried out by FTAdviser Advantage, in association with BlackRock, found even advisers have completely opposing views on whether to put more money into the UK stock market in the immediate term, or to hold off.
According to the research, it was exactly 50:50 with some advisers saying the economic uncertainty at the moment meant they should be advising their clients to wait and see before committing more money to the UK stock market.
Half of all advisers were therefore advocating reducing UK exposure.
To learn more about what is going on with UK equities, to take part in the latest poll and for help with your investment decisions follow @FTA_Advantage on Twitter and visit the FTAdviser Advantage by clicking here.
simoney.kyriakou@ft.com
