Investment gap opens over last decade

A savings investment gap has opened up over the last decade, according to Charles Stanley Direct, with savers opting for cash savings but receiving an average 94% lower returns than investors.

Analysis by the online investment platform suggested that £10,000 invested in global markets in 2010 would now be worth approximately £30,742 – compared to £11,230 in a cash savings account.

Charles Stanley Direct’s research revealed the main reasons that prompt people to consider investing are poor returns on cash savings (33%), followed by saving for retirement (32%), or for a house (16%). The investment platform found that these responses varied across age demographics, however.

The study, based on responses from 2,128 UK adults, showed that investment appetite among 18 to 23-year-olds is driven by the desire to save for a house (30%) and being worried about running out of money (27%). For those between the ages of 24 and 38, it is poor returns on cash savings (28%) and saving for a house (26%), while for 39 to 53-year-olds, the study showed it is saving for retirement (43%) and poor cash returns (38%).

“Whatever your reason for building a nest egg, it’s essential to have a strategy in place,” commented Charles Stanley Direct investment analyst, Rob Morgan. “While it’s sensible to keep some money in a cash savings accounts, with low or even zero rates of interest you can significantly lose out by putting all your eggs in one basket.”

Despite a quarter (24%) of UK adults across all age brackets wanting to invest, Charles Stanley Direct suggested that “barriers” are preventing many from doing so, with financial jargon and complexity topping the list of reasons why.

Fifty-five per cent of respondents weren’t confident they understood financial terms, while 20% said they found keeping on top of the data too challenging.

Of the financial terminology often used, less than half (45%) admitted they didn’t fully understand inflation, 35% said they know and understand what dividends are and this number dropped to just 20% when it comes to compounding.

“Many people don’t realise if your savings don’t grow in line with inflation, they are actually losing money,” Morgan added. “To put this into perspective, today you need over £1.20 to buy you the same that £1 would have bought you 10 years ago, but cash on deposit has typically only increased to around £1.10 per pound saved.

“Transferring some savings into investment products like a stocks and shares ISA can make your money work harder, but we know that taking those first steps on the investment journey can be a daunting experience. That’s why we’re helping UK savers find the confidence to close that investment gap.”

    Share Story:

Recent Stories


Mortgage Insider Series 2 Episode 3 Mortgage Fraud & Scams
Our award-winning podcast for mortgage brokers is back! Mortgage Insider returns for a second series to help brokers make sense of these extraordinary times.



Join Claire MacPhail and Tony Rimmer, our Business Development Manager hosts, as they chat with Barclays experts and industry thought leaders on those topics most pressing for brokers - including the UK’s economic outlook, mortgage fraud, the pandemic’s impact on mental health and wellbeing, and diversity.

FREE E-NEWS SIGN UP

Subscribe to our newsletter to receive breaking news and other industry announcements by email.

  Please tick here to confirm you are happy to receive third party promotions from carefully selected partners.