New market analysis by peer-to-peer real estate investment platform, easyMoney, reveals that falling interest rates and the potential decisions of the new Labour government are the biggest concerns for UK investors as we enter the back end of 2024.
easyMoney has surveyed 1,022 UK people with investable assets over £500,000 to understand how investor confidence has been impacted by the recent reduction in interest rates, and how future rate decisions, combined with new legislation from the government, might impact their portfolio decisions moving forward.
When asked about how their confidence in seeing good investment returns has been impacted by the Bank of England rate reduction on August 1st, 50% of investors say it hasn’t made them feel either more or less confident.
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35% do, however, admit to feeling less confident in seeing returns from their portfolio, while just 15% report being more confident.
The most common portfolio asset among the investors surveyed are ISAs (37%), followed by stocks and shares (30%), and bonds (15%), and because of this, the idea that interest rates could keep falling is most commonly cited as investors’ main concern moving forward (24%).
An equally pressing concern is the arrival of the new Labour government. 24% say that the exchange of power makes them nervous while an additional 15% say that they are concerned about the specific legislative changes that Starmer’s new regime might impose.
Despite some concerns, the vast majority of investors (77%) plan to keep the size of their investment portfolio the same moving forward. 13% are planning to increase their investments, but 10% are looking to mitigate potential risk by making a reduction.
Among those who are looking to scale up their portfolio, 43% plan to do so by investing further in ISAs, followed by stocks and shares (27%), and bonds (14%).
Jason Ferrando, CEO of easyMoney said, “There continues to be an air of caution around UK investment. Very few people are sensing impending doom, but neither are they basking in great optimism following the arrival of Labour and long-awaited bank rate reduction.
“One incredibly valuable insight, however, is the continuing confidence in ISAs as an investment asset. The UK’s investors still hold them in high regard, relying on their reliability to form the backbone of their portfolios. ISAs are less vulnerable to economic shocks than the likes of stocks and shares, with average returns constantly sitting around the 4% mark.
But even greater potential is found in the Innovative Finance ISA (IFISA), such as that offered by easyMoney and backed by the UK’s remarkably resilient property industry.
With an IFISA, investors are looking at returns of up to 7.5%, a rate which has remained constant throughout recent economic woes thanks to the fact that it’s one step removed from the mainstream investment landscape that is so susceptible to ups and downs of the national and global economy.”
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