TWO THIRDS of UK savers are aware that they are losing money in savings accounts once inflation is accounted for, but they are still unwilling to invest.
According to a new survey from financial services group Scottish Friendly, a large portion of the UK population is suffering from “investophobia”, with almost half (49 per cent) of Brits admitting that they were scared of losing money through their investments.
Read more: EasyMoney calls for cash ISA risk warning
Meanwhile, 28 per cent viewed financial products as too complex or simply did not understand how they work, and a further 12 per cent were put off by the investment jargon used by financial services providers. As a result, almost four in 10 (39 per cent) people said that they prefer to keep their savings in cash, despite historically low interest rates and rising inflation.
Read more: Investors dumping cash ISAs for IFISAs
“By holding savings exclusively in cash at the moment many British savers’ are effectively letting their money diminish,” said Calum Bennie, a savings specialist at Scottish Friendly. “Every pound that they save becomes less valuable while held in an account that delivers returns below the rate of inflation.
“Worryingly, our findings suggest the savings and investment decisions of so many Brits are being driven by a nagging fear of losing money and this ‘investophobia’ may be clouding personal judgement when it comes to important financial decisions.”