New research carried out by YouGov for TD Direct Investing shows that almost 4 in 10 British adults (38 per cent) do not plan to make any investment towards their retirement over the next 12 months.
This is in stark contrast to North American and Asian investors who are well attuned to investing in equities for when life begins to slow down, highlighting a disparity in financial forward planning techniques.
A recent Gallup poll found that, in the US, over half (53%) of respondents plan to rely on investment in stocks and shares to fund retirement, in the form of individual stock investments or a stock mutual fund investments. This is over three times more than in Britain, where just 15 per cent of those surveyed say they would consider using a stocks and shares ISA for retirement – despite being tax efficient and more likely to generate positive returns compared to savings accounts or cash ISAs.
Further afield in Japan, a 2013 survey from Ageon found that a third (33%) of Japanese retirees bought a self-managed investment product in order to fund their retirement.
The new findings come at a time when British savers are battling static interest rates and uncertainty amid a gradual rebalancing in the economy.
“The research shows that Britain lags behind the Americans and Japanese in planning for old age. It is striking to see such a discrepancy in pension planning, particularly when Britain is experiencing a sustained low interest rate environment with no signs of change in the short to medium term. It begs the question, what’s so unique about the British context that makes us resist the potential of higher returns for a more secure future?” said Stuart Welch, CEO of TD Direct Investing.
“With wages falling in real terms and Governor Mark Carney advocating ‘low rates for longer’, we are calling on all Britons to consider the investment opportunities now available in the market which might help them avoid being caught out during later life,” he said.
The study found that whilst consumers may consider stocks and shares ISAs over cash ISAs, as they can help generate some return in a low interest rate environment (21 per cent), some of the challenges people cited was a lack of understanding of ISAs (7 per cent) and ‘too many providers or products to choose from’ (10 per cent).
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