The results of a recent survey carried out for F&C Investments by online market research specialists www.OnePoll.com make for interesting - if not exactly inspiring - reading.
The survey, which was completed by 3,000 adults across the UK in April, sought to discover people's attitudes to investment. It looked at areas including perceptions of risk, people's financial plans for themselves and their families, and expectations for the future.
But while the vast majority recognised that saving and investing was at least a good idea, their overall attitude to risk could have a serious impact on the chances of reaching their goals.
Asked what would most attract them to an investment, nearly 30% said total capital security, with almost 40% choosing a good rate of interest, meaning 70% have essentially dismissed equity investment at the outset. While a regular income was valued by 13% of respondents, fewer people (6%) said they would be attracted by higher potential returns but with some risk of capital loss (such as is offered by investing in shares) than would be attracted by ‘free stuff like vouchers' (8.5%).
While some 45% said the riskiest level of investment they held was cash on deposit, they are probably not taking into account the ‘risk' that with inflation currently far ahead of most interest rates, cash in the bank is actually losing money in real terms.
Furthermore, only 6% said they would take more risk with investments for their children than they would with their own investments. In fact, for those who can accept some risk to their capital, an investment in equities on behalf of a small child may have more time to grow and recover from any short-term market moves than an investment one might make for oneself.
Overall, only about one-third of respondents agreed that the stockmarket offered better long-term growth and/or income potential than cash deposits. However, evidence points to the majority view in this case being wrong: the latest edition of the respected Barclays Capital Equity Gilt Study shows that even over a holding period of just two years - which is shorter than most financial experts would counsel - shares had a 66% chance of outperforming cash. Looking at longer time horizons, over five years there was a 75% chance of shares doing better than cash, rising to 90% over 10 years and 99% over 18 years. (These figures are based on past performance since 1899.)
Jason Hollands, Head of Corporate Affairs at F&C Investments, commented: "Of course there is a place for cash as part of an overall investment strategy: a ‘rainy day' fund, for example, can help you avoid having to sell investments at an inopportune time in order to meet an unforeseen expense. But by refusing to consider any investment that offers the risk of some capital loss alongside the potential for greater gains, people are opening themselves up to the eroding power of inflation, as well as sacrificing the chance of genuine capital appreciation."
For the full survey results, please contact the F&C Press Office on 020 7011 4215 or email sarah.godfrey@fandc.com
|
