Some fortunate people have built up unexpected savings throughout the last year. But only a small percentage are choosing to invest in stocks with this surplus. With interest rates at historical lows, a lot of cash is gathering dust.
We take a look at what this all means for your money and better ways that you can put your savings to work.
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Who is saving their money?
According to data from financial services provider Wesleyan, the coronavirus pandemic has been a catalyst for saving among Brits.
Around 33% of women and 24% of men are prioritising their savings. It’s not just wishful thinking either. Average monthly savings have risen to £276 from the pre-pandemic level of £240.
It also looks like the 18-24 and 35-44 age groups have been the biggest savers.
How are Brits spending less and saving more?
Admittedly, we’ve all had a lot less to spend our money on in recent times. Our spending has been trimmed down substantially and much of it not by choice. According to this research:
- 60% have been spending less on socialising
- 53% have saved money on travel and commuting
- 48% have spent less on holidays
It’s still great to see saving habits taking hold. I’m sure many of you will carry these good practices into a lockdown-free future!
Where are people saving their money?
Saving money is excellent. But once you’ve done it, you need to think about what you want to do with those savings.
This data shows that 55% of people are keeping their money in cash savings accounts where the interest rate is typically lower than inflation. So, over time – you’ll be able to purchase less with this cash.
Investing in stocks can be a good strategy to grow your savings and beat inflation. Although there have been plenty of new investors this past year, it looks like many Brits are still sat with their savings on the sidelines. Only 14% are investing in stocks and shares.
Interestingly, around 15% of adults who don’t currently invest say they do want to find out more. Sometimes with investing, it can be hard to know where to start.
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Why are people not investing in stocks?
Although lots aren’t investing in stocks right now, many are keen to learn. This is especially true amongst younger age groups. This is great because time can be your friend when it comes to investing.
It might be a lack of knowledge and confidence holding you back, which is completely understandable. Investing can seem overwhelming at first, but it’s not as scary as you might think.
Investing does carry risks and you’re not guaranteed to make money on your investments. But with the right information and tools, you can give yourself a good chance of doing better than the current 0.7% rate of inflation. Interest rates are so low that it’s also important for you to consider the risks of cash.
How do I learn about investing in stocks?
You might have built up savings and haven’t invested yet. If you want to try and get a better return on your money than you’re getting with your savings account, I don’t blame you!
We have plenty of resources here at MyWalletHero for you to learn about investing in stocks and shares.
Investing can be for everyone and you don’t have to be an expert in finance to understand the basics. Everybody has to start somewhere. You might even begin to enjoy your investing journey and the process of learning.
Where can I start investing in stocks?
Once you’re comfortable that you want to put your money to work, the next step is to open an account and actually start investing.
Using a cheap share dealing platform can be a great way to learn how the markets work with some small investments. Or if you’d prefer less involvement, an investing solutions platform can pick and organise everything for you.
Either way, a stocks and shares ISA is a useful tool for building your portfolio because it will help to shield your pot from tax as it grows.
Please note that tax treatment depends on the specific circumstances of the individual and may be subject to change in the future.
