By Maisie Grice

Copyright cityam

Fears over falling stock prices are prompting UK savers to avoid investing, new research has found, with Brits preferring to park their earnings in cash.

According to online trading platform IG, three in five savers believe any form of retail investing is too risky, despite government and industry figures’ encouragement to increase their exposure to the stock market.

Over 70 per cent of respondents credited disclaimers, such as the frequently seen “capital at risk. You may get back less than you invest”’, as deterring them from taking the initial step away from cash and savings accounts.

Michael Healy, UK managing director at IG, said: “We urgently need to change the perception of investing so more people in the UK can benefit from the long-term wealth building opportunities it offers.

One area we can address immediately is the way we frame risk for both cash and investments.”

Cash is king

Over 50 per cent of people were also unaware that cash loses value over time, ultimately eroding the amount saved, due to inflation impacting the purchasing power of money.

In particular, young people lacked a significant understanding of the impact of inflation on cash, believing it to only affect investments, reflecting their attitude towards retail investing.

In the 2023/24 financial year, investors increasingly scrambled for cash, with the number of cash ISA subscriptions growing by 67 per cent to £69.5bn, according to HMRC data, with 9.9m open accounts.

Meanwhile, stock and shares ISA subscriptions rose by just 11 per cent to £31.1bn, with 4.1m open accounts.

Damon Hopkins, head of DC workplace savings at Broadstone said: “Cash certainly remains king in the UK…despite the long term growth potential that other assets can offer savers.”

Marianna Hunt, personal finance specialist at Fidelity International also warned that “if interest rates should continue falling, cash returns are likely to drop further”.

Show the risks

However, 30 per cent of respondents said they would be more likely to shift their money from savings accounts to the stock market if cash accounts detailed the inflation risks.

Industry figures are calling for regulators to enforce balanced risk disclaimers across both cash and traditional investment products, to prevent over reliance on cash and boost overall returns.

Healy said: “Cash accounts should carry the same proportionate risk warnings as investment products.

“We also need to balance the risks and potential rewards of investing, rather than focusing solely on fear.”