Over 50s mull investments due to base rate cut
A THIRD of people over the age of 50 are considering investing more of their savings due to the recent base rate cut, new research has found.
And more than half of people over 50 say they are facing a loss of income as a result of the rate cut, according to Saga Investment Services who commissioned the research.
The Bank of England cut interest rates to a historic low of 0.25 per cent in August. The central bank warned last week that the cost of living will soar far past its two per cent target to 2.8 per cent in 2018, providing even more bad news for savers.
9,654 people aged 50 and over were interviewed for Saga’s study. It found that a quarter of the respondents who had only ever invested in cash are now thinking about investing in something else, while a third of over 50s overall say they are looking to invest more of their savings in the pursuit of higher returns.
The survey also revealed a lack of information surrounding retail investment. One in four people said they would like to invest, but did not know where to start. Women are more likely to say they would need advice than men, at 33 per cent and 25 per cent respectively.
“There’s a real dilemma at the moment as people can’t get returns on cash, but investors’ confidence in the market is pretty low,” Danny Cox, chartered financial planner at Hargreaves Lansdown told Peer-to-Peer Finance News.
“I think people should be considering other avenues, such as taking a long-term view of the stock market or investing in alternatives such as peer-to-peer lending.
“P2P finance still makes up a small share of the market but it’s growing at a decent rate and with the introduction of the Innovative Finance ISA it is definitely going to grow more.”
Cox added that he would advise investors to spread their risk by lending to a diverse portfolio of loans through a “substantial” P2P platform and said they should bear in mind that higher returns usually equate to higher risk.
Nici Audhlam-Gardiner, managing director of Saga Investment Services, said: “As people approach retirement and beyond, it is clear that they want to make their money work harder for them so that they can continue to enjoy living life to the full.
“We are seeing a real shift in people who are considering moving more of their cash to investments.
“While some over 50s are sophisticated investors and happy to make their own decisions, others are returning to investment or dipping their toe in the water for the first time.
“They are telling us they would like some help to navigate their way to the most appropriate investment for them.
“They should ensure they speak to an expert who will take into account their appetite for risk and time horizon for investing, rather than opting for whatever offers the highest return.”