Investment in stocks and shares ISAs by older investors in the UK continues to rise sharply following a slow start to the year, but contributions from younger savers has fallen by 31% quarter-on-quarter as they pulled back from the market during Q3 2020, new research from Scottish Friendly’s Investor Index has revealed.

The easing of COVID-19 lockdown restrictions concurred with a quarterly 7% increase in the value of new investments among investors aged 50 to 64 in the three months to September, which marks a 20% rise on the same period in 2019.

Despite a quarterly increase in contributions from older investors, the total value of investments in stocks and shares ISAs among all customers in the UK decreased by 9% in Q3, Scottish Friendly’s Investor Index revealed. This was largely driven by a reduction in the value of new investments among investors aged 18 to 34, which decreased by 31% between Q2 and Q3 2020.

Kevin Brown, savings specialist at Scottish Friendly, said: “The overall uptick in new investment is a positive sign that Brits’ confidence with investing is beginning to return. The first three months of the year proved a difficult time for markets, and the level of investment in stocks and shares reflected this.

“The easing of lockdown restrictions in Q3 seems to have gone some way to reassuring investors to return to stocks and shares. Some people have been able to set a little extra aside, which may have contributed to the surge in investments. However, we are not seeing this upward trend right across the board as younger investors, particularly those aged 18 to 34, have bowed away from investing. There are several factors that could be at play here, including the fact that these adults are more likely to have young dependants and therefore have less money to continually save and invest. In these uncertain times, a more irregular approach to saving could prove a better method for younger families. Putting away a small amount whenever possible can still be an effective way to build up a significant pot over the long-term.

“As lockdown measures fluctuate and we approach the end of the year, we expect total UK investments to decrease, with an upsurge during the first half of next year as people begin to rebuild their finances after Christmas.”

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