Ahead of this week’s Bank of England announcement on interest rates, a consumer attitudes survey from financial services firm True Potential LLP has revealed that almost half of the population still hold all of their savings in cash despite consistently low interest rates.
When the announcement is made on Thursday 10 July, the Bank of England is expected to hold interest rates at 0.5% for the 65th month in a row.
The consumer attitudes survey of over 2,000 people has shown that since interest rates were lowered, 48 per cent of people have kept all of their savings in cash. Just 11 per cent have moved their investments into stocks and shares where greater value can be achieved, and 8 per cent has chosen to invest in property.
These figures rise among women, with 50 per cent choosing to keep all of their savings in cash, and just 7 per cent investing in stocks and shares, compared to 14 per cent of men.
Daniel Harrison, senior partner at True Potential LLP commented: “Interest rates decreased to this record-low level in March 2009 and since then savers have been hard hit.
“Stocks and shares investments have consistently performed better than cash, however as our research shows, savers still prefer to put their money into cash savings accounts. This means that in almost all cases, the fund cannot keep pace with inflation and so is actually reducing in value. The only real winners with cash savings are the banks who use these vast reserves to lend money at a much higher rate.
“We need to see a move from saving in cash alone and a greater use of stocks and shares investments, especially as the new ISA means the average family can shelter £30k per year from the taxman. For this to be possible, it needs to be as easy to save as it is to get a loan and that means there is a need for greater education around ways to save and technology to make saving and investing a simple part of everyday life.”
The full findings of the consumer attitudes survey are detailed in the “Tackling the Savings Gap” whitepaper found at http://www.tpllp.com/resource-centre/