Boosting retirement savings is a key goal for more than half (59%) of UK investors, amongst the highest proportion globally, according to new findings from the Schroders Global Investment Trends Report 2014, a survey of 15,749 investors across 23 countries.
Globally 46% of investors said retirement saving was a core investment goal, with the UK among the countries where investors are most focused on using investments to create an alternative retirement income. Among European investors, only those in Switzerland said retirement saving was more important to them (with 60% saying this was their key investment goal), compared to 59% of UK and German investors who named retirement saving as their primary focus.
However, despite this long-term savings goal, and the FTSE hitting a 14 year high, UK investors say they will allocate a high proportion of money to low-growth cash assets, and a relatively low proportion of money to high-growth assets such as equities. Furthermore, their investment timeline is at odds with their long-term investment aims, with just 5% of those polled saying they invest for a 10 year + timeline.
When asked how they would allocate investments in 2014, UK investors said they would place just 13% of their money into higher risk assets (such as equities), whilst 38% would allocate funds to medium risk assets (such as bonds). The majority of investors (49%) would place their investments into low-risk assets such as cash.
In addition to a divergence between retirement goals and investment behaviour, the Schroders Global Investment Trends Report 2014 also reveals that almost half (47%) of UK investors anticipate they will need to financially support their children during the next five years, with one-in-seven (14%) anticipating their grandchildren will need some financial support and 9% expecting to have to support their parents.
Schroders is warning that the divergence between investment goals and the reality of how people are investing and saving could jeopardise many people’s ability to build the retirement pots they are seeking to achieve and the company is urging investors to seek professional advice.
The survey revealed that just 43% of UK investors say they gain professional advice before making investment decisions.
Robin Stoakley, Head of UK Intermediary, Schroders Plc said: “UK investors are clearly focused on the need to boost retirement saving, and changes announced in the recent Budget allowing people to withdraw their entire pension pot as a lump sum have further stimulated debate and focused attention on the need to make adequate provision.
“However the reality is the additional flexibility announced by George Osborne is not on its own enough to guarantee a comfortable retirement. Investors should ensure they structure their portfolios to deliver the returns they need over the relevant time horizon and review the assets they invest in to ensure they are achieving an appropriate balance of risk, growth and income to suit their needs.
“Given the importance of structuring portfolios to get the best asset allocation to meet long term goals, it is surprising that less than half of UK investors seek professional advice. We would hope that this means investors will review their portfolios in the light of the changing global economic environment and Budget amendments to ISA allowances and pension rules, and gain expert guidance on the asset classes, tax wrappers and growth and income combinations available to them."
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