Talking Point  

Investors worried about market crash amid cost of living fears

Investors worried about market crash amid cost of living fears
Shoppers at a market in Walthamstow (credit: Tolga Akmen / AFP via Getty Images)

Over a third (36 per cent) of consumers believe cost of living crisis will stop them from hitting financial milestones, according to a poll from Interactive Investor.

The study also found that the cost of living crisis was the second biggest threat to personal finances among the sample, cited by almost a third (30 per cent) of respondents, behind a stock market crash (50 per cent), with a recession ranking third (10 per cent).

The poll of over 3,000 interactive investor website visitors between 21 and 25 April 2022, found that one in five (21 per cent) expect to delay retirement as a result of rising prices. 

Another 15 per cent of the sample said the cost-of-living squeeze will stop them from paying off their mortgage (4 per cent), buying a house (3 per cent) paying off credit card debt or loan (2 per cent) or another financial milestone (6 per cent).

Myron Jobson, senior personal finance analyst, Interactive Investor, said: “For investors, the current stock market malaise is the most pressing concern, with the FTSE All Share, S&P 500 and the MSCI World indices all down since the start of the year, and even the most celebrated funds have stumbled. 

“Volatile markets mean there may be more bad days than good days but avoiding knee-jerk reactions and sticking with your convictions can make all the difference. History might not be repeated but all the evidence shows us that markets grow over time, which bodes well for those who aren't seeking to withdraw their cash anytime soon.

“Drip-feeding money into stock market is an effective way to lower risk while investing. The idea is that making small but regular payments reduces the risk of a big hit. By regularly investing the same amount, you also buy fewer shares when they are expensive and more when they are cheap to deliver a smoothed return.”

On growth, the UK has significant headwinds in 2022: the shock to households from the rise in taxes, energy bills and general cost of living, while consumer confidence is expected to fall and employment growth to slow.

Last month, in a trading update from AJ Bell, the investment platform said its D2C customers invested slightly less via the platform in the three months to March compared to the same period in 2021, as investors assessed the impact of the rising cost of living.