Savers who lack confidence in stock markets could be harming their own long-term investment goals, research has found.
Ophir Gertner, co-founder of alternative investment company invest.com, said a lack of confidence among investors should be expected, given market volatility at home and abroad, but he warned investors not to flee to cash with its “miserly savings rates”.
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 (BoE) 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 option.
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 were 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 EU, Britons are still convinced that property is one of the safest investments.
However, Mr Gertner said the fear of investing could harm savers who strongly favoured cash over equities, especially after 4 August, when the BoE base rate was cut to 0.25 per cent.
He added: “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 had 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
