Britons shun investing for saving

THE BOUNCEBACK in global share prices has failed to convince Britons to return to stock market investing, new research shows.

The average amount people are prepared to invest each month is just £23 compared with £54 a year ago, according to the regular Alliance & Leicester Wealth Tracker Index. The collapse in market confidence comes despite a near-40% recovery in the FTSE 100 since a low of 3287 points last March.

Investors, apparently still scarred by the three-year plunge in markets up to last March, are putting their money into savings accounts. Britons hope to save on average £123 each month, or 35% of their average disposable income, up from £102 a year ago.

People in Wales are the biggest savers, intending to tuck away £205 a month for the next three months. People in the North are less financially prudent, saving just £59 a month. People in the South East are the biggest investors, intending to put away £55 each month.

'Despite a significant recovery in stock market performance over the last few months, consumer confidence is slow to return,' said Sarah Whitehead, investments product manager at Alliance & Leicester. 'However, people should remember that over the long term, stock market based investments can provide more attractive returns than cash based accounts and should be considered as part of a savings & investment portfolio.'

The findings will make chilling reading for fund management companies and independent financial advisers who depend on February and March as the year‘s busiest period. Investors who have forgotten to use their tax-free £7,000 Maxi Isa allowance generally rush to buy before the 6 April deadline. April is also busy as investors take advantage of the allowance for the new tax-year.

This survey suggests people are more inclined to use their allowance for a Mini Isa cash savings account rather than an investments-based Maxi Isa.