Despite poor overall savings rates, most British adults save regularly – however few are seriously looking at alternatives to miserable cash deposit rates.
Research by Axa Investment Managers found 54 per cent of Britons squirrelled money away at least once every quarter last year. Almost two-thirds of those surveyed put cash into a savings account every six months.
Despite 47 per cent of savers expressing dissatisfaction with bank interest rates, none of them were planning to move their cash into higher-yielding investments.
One in two UK adults looked at alternatives to cash accounts savings option, but it did not appeal to them.
A fifth believe they do not have enough money to get into other forms of investment, while 10 per cent were not aware of other options to a savings account.
Axa Distribution Fund manager Richard Marwood says it is encouraging that so many people are managing to save regularly in a tough economic environment. But investor apathy over low returns is destroying the wealth being tucked away.
“Prudence is not paying off, as many people who are saving regularly into a cash account will actually be seeing the value of their money decrease over time as cash rates aren’t keeping up with the rate of inflation,” Marwood says.
At year’s end 2013, the average interest rate for accessible accounts was about 0.8 per cent or even 30 basis points for those opened more than five years prior.
Meanwhile, in the year to July CPI was 1.6 per cent and the RPI 2.5 per cent.
Only a third of those surveyed were concerned about the effect of inflation on the value of their money.
Marwood says Britons should not be daunted by investing and it is not exclusively for those with large pots of money.
“All it takes is to channel some of that regular saving each month into an investment account rather than a savings account,” he says.
“There is no need to go gung-ho into stocks and shares either, as you can get investment funds that can be suitable for the cautious investor and are just one step up from cash.”
The survey of 2,003 representative UK adults was done by Opinium in mid-June.