Two in five people will never invest their money, even if they had plenty of cash, but more than a third (36 per cent) of all investors would consider property investments, while one in six said that they would put their money in the stock market.
According to a new survey commissioned by Hargreaves Lansdown, women are more reluctant to invest than men, with 43 per cent of female respondents saying that they wouldn’t invest.
After property and the stock market, the most popular alternative investment is coins, followed by wine and cars.
“Our love affair with property knows no bounds, so it’s no shock that when people are prepared to invest, they favour property over anything else,” said Sarah Coles, personal finance analyst at Hargreaves Lansdown.
“Homeowners tend to think they understand property, but investing in it is very different to owning your own home, and comes with substantial costs and risks.
“The stock market comes a distant second, because people are worried about the risks involved. This tends to be because they overestimate the risk of stocks losing value over the long term, underestimate the risk involved in property, and forget the risk that inflation will eat away their cash if they keep it in a savings account instead.
“The fact that so few people are interested in alternative investment like wine and cars makes sense. Some people make money out of this kind of alternative investment, but they come with serious costs and risks, so unless this is your passion and you’re prepared to lose money in order to collect something you love, there are less risky options.”
Hargreaves Lansdown pointed out that while property tends to increase in value over time, investment performance depends entirely on the specific property – its condition, location and market value. There can also be tax issues around property investment, as well as ongoing maintenance costs.
However, property-backed peer-to-peer lending platforms have performed well with investors even during the coronavirus pandemic, by offering access to property market investments without the risks involved with direct property management.
In recent months, CapitalStackers revealed that it has repaid £1.4m to investors and Blend Network has paid over £2m to lenders.
Furthermore, CapitalRise reported a 37.5 per cent rise in loan volumes in the first five months of this year, compared to its total lending over its first 18 months of operation.
Proplend saw its loan enquiries double in June and CrowdProperty has seen record levels of direct applications for funding from developers, including from those which have had funding offers reneged upon by other lenders that have stopped lending.