Seven out of 10 people will not splurge excessive savings accumulated over the pandemic, according to a global poll carried out by one of the world’s largest independent financial advisory and fintech organisations.
When asked by deVere Group ‘Are you likely to spend the majority of the extra money you have managed to save over the last 12 months?’ 72% responded ‘no’. 16% said ‘yes’ and 12% ‘did not know.’
The 450-plus respondents are clients who currently reside in North America, the UK, Asia, Africa, the Middle East, East Asia, Australasia and Latin America.
Nigel Green, deVere Group CEO and founder, says: “The pandemic has been a time of great financial worry and insecurity for many households.
“But for others, especially those in developed economies who have been able to continue working from home throughout, they have accumulated more savings than they usually would due to the lack of services, travel and leisure activities to spend their incomes on.”
For example, Britons have amassed around £100 billion of excess savings during the lockdowns, according to the Bank of England. The household saving ratio soared to an all-time high of 29.1% in the second quarter of last year. It’s a trend that is mirrored in most major economies around the world.”
The deVere CEO continues: “The historic levels of excess savings are fuelling economic rebound forecasts, and with them inflation fears, as there’s expectations that families will splurge the extra money built-up during the pandemic.
“However, our poll suggests that most people are not planning to spend much of the additional cash.
“Naturally, we should expect an increase in spending as economies re-open, but the majority of those surveyed appear to welcome having an extra financial buffer.
“The pandemic has got people thinking about and valuing more than ever what really matters to them. For most of us, this includes ensuring that we and our loved ones are financially secure to have the opportunities and lifestyles that we desire.”
He goes on to say: “Whilst it is certainly a positive to have accumulated savings for the future, in order for the cash not to be eroded over time in bank accounts offering almost zero interest, the money should be ‘put to work’ through a sensible investment strategy.
“In all my years of being a financial professional, I have only ever come across a handful of individuals who have acquired enough money for their retirement by saving alone – and that has usually been because it was inherited wealth.
“To me, having the correct investment mix — or, in other words, a properly diversified and regularly reviewed portfolio — is vital for long-term financial success. In order for a portfolio to be truly diversified, I believe it needs to incorporate different asset classes, sectors and geographical regions.”
Mr Green concludes: “After an initial burst, households are not likely to aggressively spend their excess savings accumulated during the pandemic.
“But in order to enhance the purchasing power of the additional funds, understandably many will be seeking to top-up their investment portfolios.”