UK investors are cutting back on their routine spending in order to save and invest. Some 39 per cent of UK investors have dramatically reduced their monthly spending in order to increase investments and savings throughout the Covid-19 pandemic, according to new data from prime brokerage firm, ITI Capital.
Justifying this decision, 39 per cent of investors revealed that they would rather invest money in certain assets, than hold it in cash due to poor interest rates during the Covid-19 crisis. Additionally, 35 per cent admitted that if banking interest rates were cut any more (or negative rates introduced), they will invest most of their fiat currency in preferred assets.
This data was revealed via a poll of 2,000 UK investors, commissioned by ITI Capital and conducted by independent research company Censuswide in December 2020. The respondents were surveyed on their savings and investment plans for the year ahead.
FCA restrictions on cryptocurrency having an impact
Traditional investment asset classes were favoured by the respondents, as only 24 per cent revealed that they are exploring cryptocurrency as an alternative investment option as it has not been negatively impacted by Covid-19. Furthermore, just 26 per cent agreed that they are more willing to try new investment products and take more risks over the next 12 months. This was not surprising given the restrictions the FCA has placed on retail clients being able to invest in cryptocurrency assets.
Interestingly, 40 per cent of investors revealed that they anticipate a market ‘bull run’ in 2021 if the Covid-19 situation dramatically improves, such as, if the vaccination programme is successful and the infection rates dramatically reduce. Conversely, 35 per cent said that are expecting a house price crash, worse than 2008 to occur in 2021.
Furthermore, 42 per cent of respondents said that they are planning to continue investing in ISAs and pensions despite the turmoil caused by the crisis.
On the other end of the spectrum, 36 per cent of investors revealed that they have actually dipped into their savings in order to stay afloat during the Covid-19 crisis.
“Whilst the economic turmoil and market volatility caused by Covid-19 has been far from desirable, to say the least, the pandemic has admittedly birthed some remarkable opportunities for keen-eyed investors,” said Rahul Agarwal, Managing Director of ITI Capital “Scouting these opportunities requires investors to be extremely vigilant and safe, else they risk losing large amounts of capital to turbulent markets. Therefore, we believe enlisting the services of a professional financial advisory platform needs to be prioritised, so that even the most experienced investor can gain bespoke AI-enabled insight into market movement predictions and forecast fluctuations in asset valuations.”