A survey we conducted of 2,000 people in the UK found that 68 per cent of investments are held in cash. While savers told us that they feel in control of their finances, clearly they are unlikely to meet their long-term goals if their asset allocation does not change.
Worryingly, a number of investors look set to fall into this trap.
The survey found that while savers are striving to fulfil long-term financial ambitions such as funding a comfortable retirement, more than half of respondents said they were unwilling to take any risks with their money.
Although investors’ reluctance to move away from cash is hardly surprising – the financial crisis hit them hard psychologically, as well as in the pocket – in a world of near-zero interest rates, it may be time for them to think about the unintended consequences of their heavily skewed portfolios.
Even taking small steps out of cash and into financial markets could help to mitigate some of the risk to investors’ savings. Advisers can play a key role in making this happen by reminding their clients about the dangers of staying in ‘safe haven’ cash for too long, and that despite inflation dropping to its current level of 1.9 per cent, it is still significantly above the prevailing interest rate.
Jeremy Roberts
Head of UK Retail Sales
BlackRock
London
