The latest from Investec who are seeing stocks and other fixed assets being sold as interest rates remain high. For insurers specialising in HNW clients this is a good time to offer advice on safe storage – or the sale – of assets, jewellery, watches, classic cars and more.
Britons are increasingly moving their wealth into liquid assets, such as cash savings accounts, as interest rates have risen, Investec Bank analysis of ONS data reveals. Its analysis shows UK households now hold on average a third (31%) of their financial assets in cash, bank deposits or money market instruments. The corresponding figure in January 2022 was 28%, while in January 2021 it was 26% and in January 2020 it was 24%.
A separate new study by Investec Bank reveals that in the past 12 months around a third (29%) of UK retail investors have sold some of their stock market investments to increase their cash savings. By contrast, less than one in ten (8%) UK retail investors say they have increased their portfolio’s weighting towards stock market investments over cash. One tenth of UK retail investors (10%) say they have substantially reduced their stock market holdings so that they can increase their cash savings. Some 6% have sold over £10,000 of their stock market investments so that they can increase their cash savings.
In the past 12 months, around a fifth (17%) of UK retail investors have reduced the percentage of their investments by more than 10% to put more money into savings.
More than two in five (41%) say they sold investments because rates on savings accounts had increased, and 36% say it was because they were worried about stock market volatility. For 14% it was because they were worried about poor future returns on their investments, while one in three (32%) say they moved more of their investments into cash because they felt they would receive a better return.
Investec’s research found that the move from investments to cash is likely to continue, as more UK retail investors are planning to switch from stock market investments into cash savings. Around a fifth (22%) expect to do this over the next 12 months, compared to 11% who intend to invest more into the stock market at the expense of their cash holdings.
Of those planning to reduce their stock market holdings over the next year in favour of cash savings, three-quarters (76%) say they will reduce it by more than 10%.
WILL THE SAVINGS RATE BOOM LAST?
David Hunt, Head of Retail Savings at Investec, said:
“Soaring rates on savings accounts, combined with a difficult year for stock markets, has meant that UK investors have been increasing their cash holdings while reducing their exposure to investments. Our research suggests that this trend is set to continue. While it is crucial to have a savings buffer, investors should seek professional advice when making decisions about their investments and the balance they have with cash savings.”
Investec’s range of digital accounts, which do not have any penalty fees or hidden bonus rates, include its Online Flexi Saver for instant access, its Fixed Rate Saver account offering 1-Year or 2-Year terms for customers willing to lock money away and its 90-Day Notice Saver offering a higher interest rate than instant access in exchange for 90 days’ notice on withdrawals.
Investec’s Online Flexi Saver is a simple and secure instant access savings account. It pays an interest rate of 4.70% AER* monthly on balances of between £5,000 and £250,000, provides instant access to savings, and allows unlimited deposits and withdrawals to a linked current account.
The Investec 90-Day Notice Saver pays 5% AER on balances of between £5,000 and £250,000. It also offers unlimited deposits with withdrawals subject to a 90-day notice period.
The Fixed Rate Saver provides simplicity and security for savers and pays an interest rate of 5.30% AER over a one-year fixed term or 5.05% AER over a two-year term on balances of between £5,000 and £250,000. Interest is paid at the end of the term on the 1-Year and at the end of the first year and at the end of term on the 2-Year. No withdrawals are permitted until the end of the term, and no further deposits can be made after the first seven days.
For more information on Investec’s savings products, visit: https://savings.investec.com/
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