Britons typically start to consider their financial future when they turn 30, according to a study of 2,000 UK adults by MoneySuperMarket. At that age, it dawns on many that they should already have a long-term financial plan, the research suggests.
However, instead of acting sooner by opening a pension, ISA or investing, many Britons leave it late for a range of reasons. Fear, confusion and everyday financial pressures often get in the way, with almost a third (31%) worried about making a poor investment that could lose them their nest egg.
Barriers to starting investing
Another 23% feel they simply do not have enough money to get started, one in five (20%) find investing too complicated and 21% worry they might suddenly need the cash. For others, different priorities come first, with nearly three in 10 (29%) of those who have never seriously considered investing saying it feels too risky, while 15% say paying off debts is more important.
The study also found that almost a quarter (24%) of British adults are waiting for the cost of living to come down before starting their future financial planning.
Kara Gammell, personal finance expert at MoneySuperMarket, said: "While the value of investments can go down as well as up, holding all of your long-term money in cash can also have drawbacks if inflation - or the cost of doing nothing - reduces its spending power over time.
"Once you’ve got emergency savings covered, investing regularly over the longer term could help your money work harder towards your future goals."
Perceptions about investing
There is also a belief that investing is something you can only do once you have plenty of spare cash. Some 18% think a large amount is needed before it becomes worthwhile - putting the figure at around £4,722 on average - while one in five believe investing is mainly for wealthy people.
More than half (52%) have never invested outside their pension, while just one in four (25%) currently do so. The average adult spends almost an hour a week looking at investment information online, 53 minutes thinking about investing or what to do with their money and another 50 minutes actively doing something investment-related.
Cash habits and inflation impact
Brits also like having money close to hand, and those who keep physical notes and coins at home have an average of £822, with a purse or wallet the most popular place to keep it, followed by a safe, jar, tin or bedside drawer. Some still keep cash under the bed or mattress.
For most, it is practical rather than old-fashioned - 34% keep cash for emergencies, 26% for everyday purchases and another 26% because they like being able to access it immediately. Cash savings also remain important for emergencies and shorter-term goals, but MoneySuperMarket warns that inflation can gradually reduce what that cash will buy.
The findings come as Investments by MoneySuperMarket launches, available through its app. Its analysis found the average adult has £18,061 across savings, ISAs and current accounts, with the difference between inflation and average savings interest between 2021 and 2025 equating to around £683 a year in lost spending power. Analysis also suggests someone investing £100 a month from age 45 could build a pot of around £80,000 by retirement, based on modelled growth, although returns are not guaranteed and capital is at risk.
