Investment - Articles - Savers look to cash over concerns on investment performance

Research by Aegon has revealed that as the end of tax year approaches, savers are opting for a safety-first approach when it comes to taking advantage of ISA and pension tax allowances.

 Overall, investors are nervous about the impact of current market volatility on their investments, with 55% admitting that they are concerned about the state of the global economy or the threat of another financial crash. 63% of those surveyed said that they are worried about the impact of current market conditions on the performance of their investments, including their pension.

 Reflecting this nervousness, investors are looking to reduce exposure to potential volatile conditions during current uncertainty by opting to hold more money in cash in the next tax year. One in five (20%) of those surveyed said that they will hold more in cash in the tax year 2019/20, with just under a quarter (24%) undecided about whether or not they will save more in cash.

 Research suggests that savers are willing to forego the potential gains of investing in the stock market for the stability that cash provides. 67% said they are unlikely to invest in stocks and shares over the next year, with a relatively high proportion of 15% currently holding between 51%-100% of their investments in cash.

 Given the option, just under a third (30%) of savers would opt for a phased investment approach, allowing them to make use of their yearly ISA and pension tax allowances, by moving money from cash into other investments over a pre-defined short-term period to help avoid market timing risk.

 Ronnie Taylor, Chief Distribution Officer at Aegon comments: “It is unsurprising that in the current landscape, investors are nervous about where they should put their money. Cash offers a relatively safe short-term solution in turbulent times and our research shows that as tax year end approaches, savers are opting to hold more money in cash. A relatively high proportion of savers would prefer to opt for a phased investment approach in order to take advantage of ISA and pension tax allowances, allowing them to use cash as a temporary stepping stone before they invest in the stock market. Given the current investment climate, a good financial adviser can help build savers’ confidence and provide information to help investors navigate volatility. They can also inform you of the best investment option for you to match life stage and goals.”

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