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Stagflation is UK investors’ top fear

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UK investors fear an economic slump combined with rising inflation and are most apprehensive about cash as an asset class and retail as an investment sector, according to research from financial marketing specialist dianomi.



The research from over 1,650 investors revealed recession to be the top fear for a quarter of the nation’s private investors.

Inflation was cited as the second greatest concern by 16 per cent of respondents, followed by higher taxes at 14 per cent and ongoing concerns about unemployment still looming large in fourth place. 

Older, more affluent investors were principally worried by inflation while younger, less affluent investors feared unemployment, higher interest rates, lower property prices and a drop in sterling.

Many responses to the survey used the term stagflation to describe a worrying mix of recession, inflation and unemployment.
 
The research also investigated asset classes and sectors which investors were considering moving away from in the present climate. Some 42 per cent of investors are considering moving away from cash, followed by fixed rate savings bonds at 25.9 per cent and property at 23.9 per cent.
 
Investors, especially the affluent, are selling the retail sector. Other unpopular sectors included construction, North America and Japan. Investors responded that they are considering both buying and selling in the financial sector.
 
Of particular interest are the areas where investors are entrusting their savings at present. According to the survey, share portfolios are the most popular way to invest savings with 61.15 per cent of responses. Savings accounts, despite the widespread unfavourable interest rates available at present, took the second place with just over half of investors entrusting their money there. However, UK investors prove to be heavily reliant on financial experts for advice with their savings, with brokers and IFAs featuring in third place at 36.7 per cent.
 
The most affluent investors responded that they invest their savings via wealth managers or via funds with brokers and advisory services. Older investors listed bonds, NS&I and saving accounts in addition to funds with brokerages and advisory services. CFD trading and spread betting investments appeared to attract younger, less affluent investors.
 
Cabell de Marcellus, co-founder of dianomi, says: “The current climate is causing a lot of uncertainty for investors, many of whom need to generate retirement income and have been moving away from cash due to low interest rates and concerns about inflation. As a result, many UK investors are looking to the financial community for topical advice and support as to where they should be investing their savings to get steady income without taking too much risk. This represents a big opportunity for brokers and financial advisers to educate and advise such a valuable segment of the UK financial market.”

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