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UK investors lagging G7 when it comes to equities

Journalist: Marc Shoffman, Freelance

ended 06. January 2025

Hello, happy new year!

I am writing a piece for MoneyWeek on a new abrdn report that shows UK investors hold the smallest amount in equities and mutual funds of any G7 country (8%).

UK investors appear to be favouring cash and property instead.

I am keen for comments on why this is a risky strategy? What is stopping people investing in equities?

Kind regards

Marc

3 responses from the Newspage community

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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
There definitely seems to be a cultural bias towards cash and property in the UK. There's also often a perception of stock market investing being akin to gambling. Part of our initial process with a prospective client is to understand their biases and also, factually explore what the pitfalls of holding too much cash and/or property are. Cash and property bring their own risks and these are often underplayed whereas the risks associated with equity investing are often exaggerated. That's not to say it's without risk, but understanding history and the rationale for why things do what they do can shed a different light on things.
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Kundan Bhaduri
Entrepreneur, Investor and Landlord at The Kushman Group
Happy New Year, Marc!

The UK’s preference for cash and property over equities seems to reflect a deep-rooted cultural aversion to risk, rather than a well-calculated investment strategy. While property has traditionally been seen as a safe bet, and cash offers security, it’s becoming increasingly clear that avoiding equities can be a costly decision in the long run.

The reluctance to dive into equities likely stems from a mix of Brexit hangovers, market volatility, and perhaps an aversion to financial jargon. Yet, avoiding equities entirely is a risky strategy in itself, as inflation nibbles away at cash and property returns lag behind a diversified portfolio.

A more diversified approach could provide better protection and growth opportunities for UK investors.

Kind regards,
Kundan Bhaduri
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Faisal Sheikh
Managing Director at Monmouth Capital
It's hard to look past our peculiar, cultural obsession with property as a "safe" asset. I've lost track of how often I've heard "my property is my pension". And, interestingly, as the UK population becomes more diverse, this idea may be held even more strongly: first generation immigrants will often perceive property as a key, solid asset, the first thing to tick off if they establish themselves here; stocks and shares are risky. I know that's how my parents have always felt - despite their son becoming a financial advisor.