Three in 10 (31%) investors would sell their investments if they needed cash to cover unexpected costs, a new study from Alliance Trust has found, with one one in seven (14%) indicating they would do so at a loss.

Alliance Trust’s findings, based on 2,000 respondents, also revealed that men were slightly more likely to do this, at 16% compared to 13% of women.

When asked where they’d turn for money if they found themselves hit with an unexpected cost, and without the cash reserves to cover it, the greatest proportion of investors would use their credit card (40%), while one in five (20%) would borrow from friends & family. A similar number (18%) would cash in their investments, but only if those investments were currently in profit.

Furthermore, those with bigger investment portfolios were typically more likely to dip into their pots for cash. One in five (20%) of those with investments between £50,001 and £100,000 would cash in at a loss. This figure fell to 19% between £20,001 and £30,000, 16% between £10,000 and £20,000, 14% between £5,001 and £10,000, and 11% under £5,000. The exceptions to this sequence were investors between £30,001 and £50,000 (12%).

Meanwhile, younger investors were found to be much more likely to cash in their investments, at 43%, and twice as likely to cash in at a profit as their older counterparts, at 27% compared to 14%.

Spokesman for Alliance Trust, Mark Atkinson, commented: “Although it may be a necessity is some cases, cashing in on long-term investments to cover unexpected costs is never an ideal solution, and risks future financial security, especially for those selling at a loss.

“Though it may be tempting to dip into an investment, such as a pension fund, this could undermine your financial future.

“Where possible, it is always advisable to keep a separate savings pot to cover any unexpected costs, in order to keep your long-term financial goals intact.”

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