Savers reluctant to take risks for bigger returns
ALMOST two thirds of consumers are dissatisfied with the savings rates on offer from their bank or building society, but few are prepared to take more risk with their money, research suggests.
A poll by commercial property peer-to-peer lender Credit Peers found 65 per cent cite poor rates as their biggest frustration with mainstream providers, but 40 per cent said they were never willing to take a risk with their money, no matter what the returns may be.
Just 13 per cent of respondents out of a survey of 1,000 consumers said they were always willing to take risks in order to get the best return on their money.
Expectations of a return for their savings remains high despite prevailing economic conditions, with 44 per cent expecting a rate of return on their investments to be between five and 10 per cent.
Savers are also demanding a higher level of flexibility from their savings providers, with 84 per cent expecting the option to access funds at short notice. Other big frustrations with traditional savings include high service fees and strict penalty charges, which has led to 58 per cent now saying they trust their bank less than they did five years ago.
As a result of these challenges, over half of savers (58 per cent) trust their bank less than they did five years ago.
Read more: No end in sight for low savings rates
Torsten Hartmann, chief executive of Credit Peers, said savers should be more open to alternatives.
“What we have found is that the turbulent political environment means that people are shying away from taking financial ‘risks,’” he said.
“At the same time, historically low interest rates are severely hindering their ability to save effectively through traditional means. With an ageing population, rising house prices and cost of living compared to salary increases, this is a recipe for disaster.
“People could be making their money work much harder for them if they were more open to alternative investment options which can offer a better rate of return.”
Read more: Risk and reward