Britain is missing out on more than 11million potential investors who say they would like to invest but are being held back by a lack of confidence, research claims.
More than a fifth of the adult population, some 11.6million, who don’t currently invest but say they would be open to doing so, are stifled by misconceptions about investing and a significant knowledge gap, according to figures from investment giant Blackrock.
Some 22.6million savers say they would be unlikely to invest in the future, or would definitely not invest, Blackrock said.
It comes as Chancellor Rachel Reeves announced that cash Isa allowances would be slashed to £12,000 for under-65s in the Budget, in a bid to promote retail investing.
However, there are concerns that the move won’t have the desired effect, instead pushing more people to save money in lower yielding accounts.
In the Autumn Budget, Chancellor Rachel Reeves announced that cash Isa allowances would be slashed to £12,000 for under-65s, in a bid to promote retail investing
In order to use their full £20,000 Isa allowance, savers will now have to invest into a stocks and shares Isa or use a Lifetime Isa (which has a £4,000 allowance) or Innovative Finance Isa.
Investing is only recommended for money that you won’t need to spend for at least five years, as this allows time to smooth out the ups and downs of the stock market.
According to Blackrock, 35 per cent of savers surveyed said they don’t know enough about investing, while 31 per cent were scared of losing money.
Despite this, 58 per cent of savers said they do want to understand investing.
This knowledge appears to foster confidence too, with current investors 94 per cent more likely than non-investors to believe they have enough money to retire comfortably.
However, the gap extends beyond know-how, with some 26 per cent saying they don’t have enough money to start investing.
This is despite some 4.3million already saving £272 per month, just below the average of £344 invested each month by current investors.
It is only recommended to start investing once you already have a sufficient emergency fund, equivalent to three to six months of your normal expenses.
A fifth, 21 per cent, said they were worried about not having access to the money they have invested.
Savers, as a result, are generally unwilling to commit large sums, but some 83 per cent say they would be more likely to invest if they could do so with as little as £1 to £50 per month.
Many investment platforms offer investing from as little as £1.
Henry MacLeod, head of UK digital wealth and co-head of digital distribution EMEA at Blackrock, said: ‘Millions of British people are already doing the hard part – saving regularly.
‘But with more than £275billion sitting in accounts earning zero interest, this money is neither working hard for these savers, nor for the real economy.’
‘What our survey shows, however, is that with the right support, tools, and education, millions of British people could make their money work harder for them by taking the next step into investing.’
The UK has seen the largest increase in new investors across 14 European markets since 2022, increasing 21 per cent over the period, equivalent to some 3.5million people.
Some 32 per cent of UK adults invest in the UK.
Blackrock says the Government and financial firms need to go further and promote ‘jargon-free education’, make investing more flexible and accessible, and ‘[reframe] Isas as a familiar and low-barrier entry point to investing.’
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