Investors hold excess cash post lockdown
New research from behavioural finance experts Oxford Risk reveals nearly four out of 10 people (38 per cent) claim to have more cash in their current and savings accounts than they would normally have because they have spent less during the Coronavirus crisis.
Some 15 per cent believe they have at least 10 per cent more in cash, and 7 per cent say they have over 20 per cent more. On a gender basis, only 11 per cent of women say they have at least 10 per cent more in cash, compared to 17 per cent of men.
In terms of what people with excess cash plan to do with it, the findings reveal that 43 per cent say they won’t put any of it into stock market related products, and 17 per cent have still to decide if they will use it for this purpose. Of those women with extra cash, 49 per cent said they wouldn’t put any into stock market related products, compared to just 39 per cent of men who have excess savings.
This reluctance to invest could be partly explained by the fact that 34 per cent of survey respondents said they are less willing to take investment risk now than they were before the Coronavirus crisis started.
Oxford Risk warns that leaving too much money in cash and not investing it in stock market related products could cost you around 4 per cent to 5 per cent a year in returns over the long-term, so wealth managers and financial advisers have much work to do to make sure clients feel comfortable with their investment strategies and that they reflect their risk profiles.