Among many macroeconomic issues such as interest rates, currency value, and cryptocurrency market volatility, UK investors believe that the cost-of-living crisis has the most important impact on their investment decisions, even in the long run.
The latest data from Charles Schwab UK shows that the high cost of living is affecting people’s investment plans and actions.
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74% of investors are rethinking their initial plans, and more than half (55%) are decreasing their investments.
Investor confidence has been steadily declining since December 2021, when the most current study was conducted.
There has been a 6% decline (to 36%) in the number of investors increasing their investment amount, and an 8% decrease (to 45%) in the number of those saying their assets have increased in value throughout that time period.
The impact is being felt most by UK investors who are young and have less experience
The current financial climate is having a greater impact on younger generations of investors, with 73% of gen Z investors and 74% of millennials unsure how to protect their investments against losses, compared to 50% of boomers.
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By GlobalDataThis uncertainty is being exacerbated by the cost-of-living problem and market volatility.
Younger investors are feeling less confident in making investment decisions due to market uncertainty.
Since December 2021, 19% fewer millennials find it easy to make financial decisions, and when they do, the majority seek assistance from advisory services.
Gen Z investors have had to make significant changes to their investing strategy to avoid large losses, with a much higher percentage than boomers.
The interest in investing among new investors has decreased by 5%, from 23% to 18% since December 2021.
This suggests that investing is becoming less appealing to newcomers.
Richard Flynn, managing director of Charles Schwab UK, says: “The current socioeconomic environment in the UK is having a worrying effect on the behaviours and attitudes of British investors. The majority of UK investors are now looking to scale back their investments or have already done so. It is also worrying to see so many young investors struggling to make investment decisions – almost three quarters of gen Z and millennial investors don’t know how to adapt their investment strategies to protect against losses in the current financial climate. It is vital that they have access to educational tools and resources to help them navigate the ongoing market turbulence.”
