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Peer2Peer Finance News | August 23, 2019

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Four in 10 Brits shunning savings, RateSetter warns

Four in 10 Brits shunning savings, RateSetter warns
Anna Brunetti

ALMOST four in 10 Brits failed to save a penny in the three months to April, RateSetter research has found, with the peer-to-peer lender warning that this could lead to financial difficulties down the line.

37 per cent of UK adults did not put any money away, and just 21 per cent expected to be able to save more over the next 12 months, data from the platform showed on Tuesday.

Almost half of respondents to a survey commissioned by RateSetter blamed the non-existent returns currently available on cash, with the higher rate of inflation compressing income opportunities.

Read more: Savers urged to look for cash alternatives as inflation hits new high

“People who traditionally save their money in a cash account are in a difficult position right now,” said the firm’s head of investor operations Ceri Williams.

“Many feel that low rates mean that it’s not worth saving at all, and with inflation comfortably outstripping returns on a lot of products, it’s easy to understand why.”

Inflationary pressure surged to its highest level in almost four years in April, to 2.7 per cent, surpassing wage growth rates and squeezing households’ purchasing power.

“There’s a real risk that savers and investors who bury their heads in the sand and fail to put any money away will run into trouble in future,” said RateSetter.

Read more: Savers hit by “toxic combination” of low rates and rising inflation

On a more upbeat note, its latest research also found that almost a third of respondents were open to taking on more risk and putting their money to work.

“A significant proportion of people (28 per cent) indicated that they were prepared to take on some risk in order to earn a better rate of return on their money,” said Williams.

“That’s reflected in our experience too – we’ve seen a steady rise in the number of people investing via our platform, earning returns of around four per cent in exchange for taking on some risk.”

Young adults aged between 25 and 34 years old were the most keen on investing, as they put aside an average of £245 a month, while the 18-24 age group only saved £141 a month. On average, men invested significantly more than women, £246 a month, compared to £175, the research also showed.

Read more: UK businesses more pessimistic about future amid political chaos