UK households are significantly less invested today than they were at the height of the late 1990s dotcom boom, despite more than two decades of subsequent market growth, says Fidelity International.
Fidelity’s analysis of government data covering almost four decades shows that UK households reached an investing high in 1999, when nearly a quarter (23%) of their financial assets were held directly in investments such as shares and funds outside of pension wrappers.
However, following the dotcom crash, equity valuations fell sharply and households have steadily shifted towards cash. By the end of 2025, 35% of household financial assets were held in cash, the highest proportion since records began in the 1980s. Over the same period, only around 17% was held directly in investments, leaving the gap between cash and investing close to record highs.
Fidelity said the implications of this shift are “substantial”. It estimates that if UK households today allocated 23% of their financial assets to direct investments, there would be around £414 billion more invested in markets, the equivalent to around 14% of UK GDP.
The number would likely be higher had households maintained a 23% allocation to investments since the 1990s as they would have also benefited from more than two decades of global market growth.
Marianna Hunt, personal finance specialist at Fidelity International, said: “While market downturns are a recurring feature of economic cycles, our analysis highlights that the dotcom crash may have left a structural mark on UK investing behaviour.
“Despite strong global equity returns in the decades since, households have not meaningfully rebuilt direct exposure to markets. Since the early 2000s, UK households have been net sellers of investments in most years, even through periods of recovery.
“The result is a persistent retreat from capital markets, one that contrasts with other major economies – such as the US – where household investment levels are now significantly higher than in the late 1990s.”
Between the start of 2001 and the end of 2025, UK households were net sellers of more than £566 billion of investments. In 22 out of 25 years, households sold more than they bought.
While an ageing population, increase in the costs of housing and changes to workplace pensions could all have played a part in shifting attitudes towards investing and risk, Hunt says the overall picture is of an investing culture and appetite “that has never fully returned” following the dotcom crash.
Hunt added: “Even after years of market recoveries, households have remained cautious, holding far more cash and taking on less direct exposure to long‑term growth assets. While that caution is understandable, it’s important that households understand there is risk, too, in remaining in cash.”
According to Fidelity, more balanced risk warnings which clearly communicate both the risk and the long-term benefits of investing, as well as a national commitment to financial education would help to address this shift.
Additionally, Fidelity called upon the Government and regulators to ensure tax, product design and communications consistently support long-term investment rather than unintentionally biasing households toward cash.
