Low interest rates and rising inflation rank high among concerns for UK investors
Investors view rising inflation and low interest rates as more of a threat to their wealth than Brexit, according to a new survey of over 1,000 UK savers and 500 High Net Worth Individuals commissioned by Rathbone Investment Management.
42 per cent of investors surveyed considered the prospect of rising inflation as a major threat, and 42 per cent believed consistently low interest rates were a key concern. By comparison, just 30 per cent saw Brexit as one of the biggest obstacles to building and maintaining wealth.
Numerous economic bodies have predicted recently that Brexit will have a negative effect on the UK economy and consumer finances, but the survey shows that so far the majority of investors feel well prepared for the UK’s upcoming exit from the EU.
69 per cent of investors surveyed claimed not to consider Brexit as a substantial threat to their finances. This suggests that most investors are confident that they have taken or can take the necessary steps to mitigate any future economic uncertainty.
By contrast, the spectre of mounting inflation has raised concern for many investors – particularly those who hold a substantial amount of wealth in cash. The rate of inflation has increased substantially over recent months, rising by 3 per cent in the last month to the highest point in five years. Of those surveyed, just over a quarter (26 per cent) said they had already been negatively affected by the rising rate of inflation and a further one in five (21 per cent) were concerned that it would impact them in the near future. Conversely, one in ten (10 per cent) believed their finances had been positively impacted by the rise in inflation.
Additionally, nearly a fifth (17 per cent) of the investors surveyed said they felt more positive about their finances than the previous year, with a similar number (18 per cent) feeling less confident than a year ago.
Robert Szechenyi, Investment Director at Rathbones comments: “Brexit has dominated the political and economic agenda for the last year, and with negotiations starting to heat up, that’s unlikely to change any time soon. But in this climate of heightened uncertainty, it’s encouraging to see investors appreciate that there need not be a ‘bad’ Brexit scenario as far as their investments are concerned.
“So long as investors are vigilant and prepared to adapt and make sure their investment portfolio is diversified, they should be able to make positive investment choices which mitigate both the risks of Brexit and inflation. Speaking to an adviser will help ensure that investment choices are made with all eventualities taken into account.
“The fact that close to a fifth of the investors we surveyed felt more positive about their financial situation than last year is encouraging and shows that, despite some adverse conditions, shrewd investment strategies have the potential to reap rewards.”