Inexperienced investors are being left behind, but can get the help they need
The pandemic is set to worsen the financial divide between those with investment experience and those without, with women falling even further behind men, our new research¹ reveals.
- Almost half (47%) of those with previous investing experience plan to increase their investment activity this year, compared to just 16% of those with no experience
- Men (35%) are more likely to increase their investment activity in 2021 vs. women (24%)
- Over half (54%) of those who have invested previously have more actively engaged with their personal finances during the pandemic vs. less than a third (31%) of those who have never invested
Nearly half (47%) of those who have invested previously intend to increase their investing activity during 2021, while only 16% of those without any experience plan to do the same.
Men (35%) are more likely than women (24%) to increase their investment activity throughout this year, raising concerns that the financial divide between men and women, exacerbated as a result of the pandemic, will worsen further.
A third (33%) of people who have invested previously also expressed regret that they had missed out on the rally following the first lockdown last March, compared to just 13% of those who have not previously invested.
This suggests that those without previous experience lack awareness of the long-term gains achievable through investing and are putting off getting involved – despite the current low interest rate environment and the impact of inflation on savings. We highlighted the consequences of not being invested in 2019 and showed how much investors could have missed out, even over one year.
Investment experience correlates with wider financial engagement
Worryingly, the investor divide appears to correlate with levels of engagement with personal finances more broadly. Over half (54%) of those who have invested previously were more actively engaged with their finances during the pandemic, dropping to less than a third (31%) for those who have never invested.
Looking further ahead, half (51%) of those with investment experience have made changes to their retirement plans or intend to do so within the next 12 months as a result of the pandemic. Under a quarter (23%) of those who have not invested before intend to do the same.
Those who have previously invested are also more likely to seek expert advice from a financial adviser or wealth manager, with a quarter (25%) relying more on their adviser during the pandemic compared to just 7% of those who had not invested in the past.
Attitudes to investing and personal finances during the pandemic
Source: Censuswide, Netwealth.
“While many people have begun their investment journey over the last 12 months, our research uncovers a growing gap between those with the confidence to invest and those without,” says Netwealth CEO Charlotte Ransom. “Unfortunately, the investment gap is expected to widen, increasing financial inequality for many who have been hit hard by the pandemic already, particularly women.”
“In addition to missing out on the benefits afforded by investing over the medium to long term – especially in this low interest rate environment – the link between those with no prior investment experience and their lack of proactive engagement with their wider personal finances is worrying. If left unchecked, this divide could result in significant challenges later down the line, particularly in terms of the impact on their retirement plans, and will prevent many people from meeting their long-term financial needs.”
“While attitudes to investing vary from those who are naturally cautious to highly confident, it is vital to make educated decisions about longer-term financial needs. Starting with the bigger picture is the best first step and speaking to a financial adviser or wealth manager can be very valuable in pinpointing the key financial milestones in your ‘life plan’ and identifying how investing can help you achieve them.”
For a clearer view of your potential financial outcomes these modern planning tools can help you to model for different scenarios to see if your goals are on track. And if you need more specific direction and advice, please get in touch.
Please note, the value of your investments can go down as well as up.
¹ Research conducted by Censuswide between 12.02.2021 and 16.02.2021. The survey reached 2,041 UK adults aged 35 and over.