Cash is still king for the over 50s
Five million over 50s are expected to open a new ISA in 2017 but more people plan to deposit their money in a cash ISA than take on the risks associated with investing.
A poll of 9,000 over 50s revealed that more than half will opt for a cash ISA, while just a third plan to open a stocks and shares ISA. One in five will look to open both a cash and a stocks and shares ISA, the research from Saga Investment Services found.
Women are more likely to opt for cash rather than stocks and shares (58% vs 27%) than men (41% vs 38%) and regionally, twice as many Londoners are willing to take out a stocks and shares ISA (39%) than those in the North East (24%).
Just 2% of the over 50s polled said they will look to open a stocks and shares ISA for the first time and for more than three quarters of these people, low interest rates are the reason behind their decision.
Sally Merritt, head of product for Saga Investment Services, said: “Savers have had it extremely tough over many years now and yet many still feel uncertain about making the switch to investing. This is largely because people don’t know quite where to start and they are wary of the risk.
“However, people need to make their money work harder for them – not just to give them a higher level of income, but also simply to stop their money losing value in real terms. Ultimately, holding cash which earns less interest than the rate of inflation means that people are losing spending power. And the compounded effect of this over a number of months or years could be much bigger than they realise.”
Merritt said that if people have a good cushion of cash savings, enough to cover 6-12 months’ worth of living expenses, then it may make sense to try investing with some of their additional cash savings.
“Investing should be a long-term plan, we suggest 3-5 years as a minimum to help even out the rises and falls in the market,” she said.