UK retail investors are uncertain about making any sudden investment moves in 2023 due to concerns about persistent inflation and the spiralling cost-of-living, new research commissioned by HYCM has revealed.
The trading broker commissioned an independent survey of 777 UK-based investors, all of whom have investments in excess of £20,000, excluding the value of their residential property.
It found that just 28% of investors have confidence that inflation will be brought under control this year. A further two in five (40%) are too nervous to make investments in the current high inflation, low growth economy.
22% voiced significant concerns over the cost-of-living, claiming they will be forced to liquidate their investments if high living costs continue to escalate. This figure rises to 43% amongst those 18-34.
Conservative investment strategy
HYCM’s survey uncovered that 42% plan to adopt a conservative investment strategy, focusing on security rather than returns in 2023, with this figure rising to 55% in the 18-34 demographic.
One third (33%) plan to target their investments specifically to sectors they think will be resistant to the recession, with this figure rising to 52% amongst the youngest investors surveyed.
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Currently, just under half (49%) of the respondents surveyed have investments in stocks and shares, property (31%), and fixed interest securities (29%).
Fixed income positions still favoured
When surveyed about their plans for 2023, the majority (67%) of investors are planning to hold their position on fixed interest securities, with 63% of those with investments in stocks and shares and 56% of those who have invested in gold also looking to maintain their position. Overall, a further 23% plan to add more stocks to their portfolio.
Giles Coghlan, Chief Market Analyst, consulting for HYCM, said: “Although inflation has somewhat eased over recent weeks, with the most recent CPI figures still standing above 10%, HYCM’s research indicates that UK investors are fearful that the spectre of inflation could stick around in the long-term.”
Coghlan called inflation “a beast that eats away at hard-earned savings and plays havoc with domestic budgets”; he said the idea that it could become entrenched is something the Bank of England wants to fight. But after a difficult couple of years, even with further interest rate hikes in the pipeline, many investors remain concerned about an imminent recession.
“Naturally, this is translating into cautious investment practices,” Coghlan observed. “However it is encouraging to see that a good portion of investors are looking to fight the fall by buying the dip.”
