More than a quarter of UK investors are willing to make high-risk investments to make their money go further - with a further one in ten being happy to opt for the highest possible risk option - according to Zurich's new Wealth Risk Report..
The new study, tracking investor attitudes and behaviour, questioned consumers about their willingness to take risk and their capacity to accept a loss on their investments, creating a picture of their overall appetite for risk.
Four different investment types have emerged from the study:
• 10% are Stags, opting for the highest risk option
• 26% are Bulls, willing to take high risk
• 58% are Owls, sticking to a low risk portfolio
• 6% are Squirrels, playing it safe
The findings also show that although people's attitude to taking risk tends to remain static throughout their lives, their overall appetite for risk including their financial capacity to accept a loss on their investments is likely to change significantly with key life-change factors including whether or not they marry and if they have children.
For example, people without young families were most likely to have the biggest appetite for high risk, with one in ten classing themselves as ‘Stags’.
This fell to 12% after they had children and further still to 8% for those who’d gone through divorce – possibly having second families and bigger financial responsibilities.
And as investors approach retirement and want to protect their pension pot, just 5% were prepared to consider highest risk investments.
All types of investor were less likely to be very upset about losing money if they had taken financial advice, suggesting that it provides them with a better understanding of how investments can fluctuate in value, enabling them to reconcile a loss with the potential of gains in the future.
Commenting on the findings, David White, Zurich’s Head of Retail said:
“These findings highlight the complex nature of today’s investor. The growth in numbers of older parents, second families and those taking phased retirement all have an impact on appetite for risk and highlight the need for people keep on top of their investments and take financial advice.
“Consumers with engaged advisers are likely to have ongoing conversations about risk to ensure their portfolios are fine-tuned to reflect life changes, increasing their ability to achieve financial goals such as a comfortable retirement.
“To make the right choices, customers need an in-depth understanding of their appetite for risk, combining their ability to take risk and capacity to make loss. Given the shift we’re seeing in responsibility for individuals to safeguard their financial futures, the need for financial advice and access to simple and easy to understand investment solutions has never been more important”.
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