Savers could miss out on £37,000 from reluctance to invest in stocks
An ongoing lack of confidence in retail investing could be costing UK individuals a staggering amount of money, as people continue to opt for the safety of cash savings.
Apprehension to enter the stock market could cause people to miss out on an average of £37,000 compared to investors, according to savings platform Moneybox’s financial confidence index.
Index respondents cited they felt more comfortable relying on cash savings to build wealth, with 84 per cent, of the 4,015 individuals polled, expressing confidence in this method, up from 79 per cent in 2024.
This rising pivot towards cash was emphasised by only 11 per cent of individuals choosing to transfer their money from savings to active investments.
Need to know the basics
Investor attitude towards the stock market can be connected to a lack of knowledge on investing, with two-fifths indicating they would feel more comfortable if they knew the basics.
Similarly, over a quarter indicated they would feel reassured if they received guidance from a trusted source, such as a financial adviser.
In her recent Mansion House speech, the Chancellor detailed the government’s new campaign to improve investor confidence by promoting it in a “positive light” in order to achieve a cultural shift.
The push comes after the failure to boost financial knowledge, also caused the economy to suffer and miss out on substantial capital.
An estimated £137bn could be unlocked from retail investments if financial confidence is improved across the UK, according to Moneybox.
Brian Byrnes head of personal finance at Moneybox said, “With the government pushing for a shift towards investing… regulatory change must go hand-in-hand with boosting the financial confidence of the nation”.
“People won’t act on what they don’t understand”.
Barriers to investing
However, for some, the barriers to entering the stock market go beyond lacking confidence and knowledge.
Nearly 40 per cent of respondents expressed concern over potential financial loss if a stock performs badly. An ingrained belief that active investing is inherently risky is pushing people towards traditional savings.
A third expressed discomfort towards the unpredictability and volatility of investing in the stock market.
But, not all investors are running away from active investing, with the index indicating that there has been an improvement in confidence, up to 39 per cent from 33 per cent in 2024.
Respect cash savings to boost investment
In order to keep confidence growing, Byrnes stressed the importance of respecting the “value of saving” while continuing to encourage investing and allow individuals to get their desired returns.
He said, “Both saving and investing play a vital role in building wealth and financial security, depending on a person’s goals and circumstances.”
“The real priority should be equipping them with the knowledge to choose what’s right for their situation, so they feel confident using the full range of options available to them.”