Over half (52%) of UK adults believe that cash savings are less risky than investing, Alliance Witan has found.

The firm’s latest research revealed that 66% of adults are unaware that money invested in the stock market grows more than the interest on cash savings over the long term.

Alliance Witan’s survey revealed that of those who do not currently invest, 24% cited the risk of losing money as the biggest barrier. This is particularly true for people who do not intend to invest (28%), compared to 23% who still intend to start.

The general risks associated with investing were also cited as the aspects that confused non-investors the most (27%).

The firm said that although concerns about the perceived risks of investing prevent many people from investing, there is limited awareness of the long-term risks associated with holding savings in cash accounts.

Over a quarter (28%) believe that cash always holds its value over time, and 32% are unsure if this is true, which Alliance Witan said shows a “general lack of understanding” of the impact that inflation has on the value of cash deposits.

Furthermore, the diversified investment trust added that awareness of income investing is "worryingly low", as 46% of adults believe you can only make money from an investment if the share price rises.

Managing director at Willis Towers Watson, which manages Alliance Witan, Mark Atkinson, stated: "While investing always carries a degree of risk, it remains the most effective way of building long-term wealth and preserving the real value of savings against the ravages of inflation.

"Our research suggests that many people either underestimate this benefit or place too much emphasis on short-term market fluctuations, leading them to favour cash holdings that may gradually lose purchasing power over time.

"If you’re thinking about taking your first steps into investing, it’s important to find a comfortable home for your money that aligns with your risk tolerance and time horizon. Resources like our Learning Zone are free and informative, highlighting the importance of diversifying your portfolio and taking a long-term perspective."

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