With the government shelving a reduction in the cash ISA limit, our poll finds it could have prompted 28% of those affected to transfer savings to a stocks and shares ISA
During her Mansion House speech this week, chancellor Rachel Reeves called on the financial industry to change the negative narrative around savers investing money in stocks and shares.
The government has been looking for ways to boost the economy, with part of the solution being to get more Britons investing, rather than hoarding their money as cash savings.
Reeves has her work cut out for her, however, with new YouGov research uncovering the extent of the public’s reluctance to trust the stock market with their savings.
Only 31% of Britons say they would be willing to invest their savings in stocks and shares, including just 9% who would be “very willing” to do so. Most (55%) describe themselves as unwilling to do so, including 33% who are “very unwilling”.
When asked why they are unwilling to invest savings in stocks and shares, by far the most common answer is that “it’s too risky”, at 65%.
Unfamiliarity with how the stock market works is also holding back 41%, the second most common answer.
Smaller portions of the public have more practical concerns: 29% say they want to be able to access their savings at short notice, and 7% say they’re only planning on saving for a short time period.
While 5% say they believe cash savings are more likely to generate a good return on investment.
Would savers affected by a reduction in the cash ISA limit move their money to stocks and shares ISAs?
In the months ahead of this week’s Mansion House speech, there had been a great deal of speculation that the government would try to solve its public investing conundrum by reducing the tax-free limit on cash ISAs, in an attempt to encourage savers to transfer more money to stocks and shares ISAs.
Such plans have been shelved for the time being, with Reeves facing resistance from banks, building societies and consumer campaigners.
Had the chancellor reduced the savings limit – or in the event that she does so in the future – our data shows the impact would be limited.
Among cash ISA savers who currently put more than £10,000 a year into their pot (i.e. who would be saving more than the touted lower new cash ISA limit), 28% say they would transfer the difference into a stocks and shares ISA.
A further 33% would rather put in it a taxable savings account, while 28% say they would put it into “some other form of investment”. One in five are unsure what they would do (21%).
If we return to the previous questions, we can see that those Britons putting more than £10,000 into cash ISAs currently have similar misgivings to the wider public when it comes to stocks and shares.
While those with such large amounts of money to put in cash ISAs are more likely than the wider public to be willing to invest in stocks and shares, at 43% this is still a minority proposition – and indeed only 11% are “very willing” to do so (although from the Treasury’s perspective these may still be appealing numbers). The majority (54%) remain unwilling, with 35% particularly resistant.
Again, the most common reason for this reluctance is the risk involved (75%), followed by ignorance about the stock market (37%).
What do you think about the risks of savings based on the stock market, the government's plans for ISAs, and everything else? Have your say, join the YouGov panel, and get paid to share your thoughts. Sign up here.
Photo: Getty
