Why are so many so scared of investing their money? According to Wealthify, 52% of Brits haven’t even considered investing in the past year. This article will take a brief look at the fears that people may have, why these exist, and what can be done to change this.

Why is this?

There are all sorts of reasons why people are scared. Principally, however, the main reasons revolve around a number of trends, namely a lack of knowledge and a feeling of nervousness and mistrust regarding the whole concept. People are scared to invest because it seems overly complex and complicated, they are unsure of whether they have the knowledge to feel confident in their investment abilities, and thus, 85% of Brits prefer to put their money in savings accounts. This lack of trust is understandable, however, when you compare this with the levels of financial literacy in the UK, with a CEBR (Centre for Economics and Business Research) poll finding 73% of Brits fell below an ‘average financial knowledge benchmark’. This tends to be as a result of lacking financial education in schools, despite it being on the PSHE curriculum. Therefore, it can’t be surprising that so many of us are scared to invest if we don’t feel confident navigating the ins and outs of the investment world.

Another common theme is a question of available funds. Many think they need a significant amount of money to be able to invest, with the average amount people thinking they need around £41,300 to be able to even start. Notably our youngest investor generation, those between 18 and 30 think the number sits at around £58,000. In reality, this is far from the truth, as there actually isn’t any real threshold for investing. If you wanted to, you could invest with as little as £1.

Naturally investing isn’t simple and can come with its challenges. Profits aren’t a given, as stock markets will have their ups and downs. Nevertheless, it is a better alternative to a saving’s account. While it remains a safe option, keeping your money in a saving’s account will typically cause it to depreciate over time due to inflation, while investing in the right fund will allow for your money to grow.

How does this compare across generations?

An interesting topic is the varying attitudes to investing across generations. Interestingly, the most financially sophisticated investor generation seems to be Gen Z, with more than half of adults in this generation holding investments. An important thing to note, however, is that despite being the most engaging generation, they appear in fact to be the least confident one, in regard to their financial knowledge. This may be explained through the trend of financial education through social media, with online videos being the source of education for 45% of Gen Z, while Millennials and Gen X seem to prefer finding their information through the internet or via friends and family.

What can be done about this?

The most important thing is simply to promote financial education. In removing the mathematical obstacles and complicated jargon that seem to terrify many people, a whole new demographic would become more financially savvy, and more confident in engaging in the investment world. Lloyds Bank estimate that due to fears around investing, over £17 billion has been left in saving’s accounts that could be better invested elsewhere. Getting yourself a financial advisor is a good idea, allowing you to have peace of mind in regard to financial stability, and empowering you to feel confident without having to second-guess your own financial knowledge.

Talk to one of our expert financial advisers today, to discuss your pension planning and achieving your ideal retirement outlook.

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