Nearly three quarters of people do not plan to splurge savings accumulated over the course of the pandemic, a new poll by deVere Group revealed.
It is estimated that Britons have amassed around £100 billion of excess savings during Covid-19 as a result of successive lockdowns and working from home. The household saving ratio soared to an all-time high of 29.1% in the second quarter of 2020.
When asked by deVere Group whether they are likely to spend the majority of their extra money, 72% of respondents said no, while 16% answered yes and 12% were unsure.
Nigel Green, CEO and founder, deVere Group, said: “The pandemic has been a time of great financial worry and insecurity for many households. But for others, especially those in developed economies who have been able to continue working from home throughout, they have accumulated more savings than they usually would due to the lack of services, travel and leisure activities to spend their incomes on.”
Green noted that despite historical levels of excess savings fuelling economic forecasts and inflation fears amid expectations that families will seek to splurge post-pandemic, most people appear to welcome having an “extra financial buffer.”
He explained: “The pandemic has got people thinking about and valuing more than ever what really matters to them. For most of us, this includes ensuring that we and our loved ones are financially secure to have the opportunities and lifestyles that we desire.”
However, Green said people should be careful not to let the value of their savings erode over time in bank accounts with zero interest.
Green added: “The money should be ‘put to work’ through a sensible investment strategy. In all my years of being a financial professional, I have only ever come across a handful of individuals who have acquired enough money for their retirement by saving alone – and that has usually been because it was inherited wealth.
“To me, having the correct investment mix — or, in other words, a properly diversified and regularly reviewed portfolio — is vital for long-term financial success. In order for a portfolio to be truly diversified, I believe it needs to incorporate different asset classes, sectors and geographical regions.”