Three fifths (60%) of UK savers avoid investing because they believe it is too risky, says trading platform IG.
Almost three quarters (72%) say disclaimers such as ‘Capital at risk. You may get back less than you invest’ deters them from investing.
The figures highlight the challenge the UK faces in changing perceptions of investing, with the country currently having the lowest level of retail investment among G7 nations.
However, the research suggests a more balanced approach could unlock millions of potential investors, with more than a third (35%) of non-investors stating that they would consider investing if warnings explained both risk and reward.
Additionally, 30% said they would be more likely to move money from cash to investing if cash accounts highlighted inflation risk.
There is a lack of understanding, particularly among younger savers, of the impact of inflation on cash savings, with 51% unaware that cash savings can lose value over time due to inflation, the study found.
IG is calling for regulators to enforce balanced and proportionate risk disclaimers across both cash and traditional investment products, outlining both the risks and potential rewards.
Michael Healy, UK managing director at IG, said: “We urgently need to change the perception of investing so more people in the UK can benefit from the long-term wealth-building opportunities it offers. One area we can address immediately is the way we frame risk for both cash and investments.
“The Government is clearly focussed on this issue and we welcome the recently launched consultation. We would encourage policymakers to be brave in driving meaningful change. Cash accounts should carry the same proportionate risk warnings as investment products, highlighting the real risk that inflation can erode savings over time. We also need to balance the risks and potential rewards of investing, rather than focussing solely on fear.”
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