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Could it be time to move away from cash?

Could it be time to move away from cash?

Category: Investments

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The state of the savings market is understandably leaving many savers frustrated, particularly those of the older generation who rely on a healthy return to boost their income and fund later life. That's why many are deciding to look away from cash, and are considering investing in the stock market instead.

That's according to research from Saga Investment Services, which found that a third of over-50s surveyed are looking to put more of their cash in investments following the recent base rate cut. This could signal a sharp change in behaviour, with one in five having only ever put their money in cash savings accounts, but the desire for greater returns is leading many to consider alternatives.

Given that savings rates are falling so rapidly – and that any decent deals are being withdrawn from the market at an alarming rate – it's little wonder that so many are seeking non-cash investments. Indeed, 54% of respondents felt that the base rate change will affect them in some way, with more than half saying that they face a loss of income as a result. Many will even have to cut back on their spending, with falling returns meaning their new monthly budget simply doesn't go far enough.

Suffering from a loss of income will no doubt encourage people to rethink their options – of those who have only ever invested in cash, almost a quarter are now starting to think about investing in alternative vehicles for the first time, a figure which rises to 30% of those in their fifties. This is also the age group least likely to have invested in shares before, so the desire for greater returns at this stage of life is clear.

"As people approach retirement and beyond, it is clear that they want to make their money work harder for them so that they can continue to enjoy living life to the full," said Nici Audhlam-Gardiner, managing director of Saga Investment Services. "We are seeing a real shift in people who are considering moving more of their cash to investments.

"While some over-50s are sophisticated investors and happy to make their own decisions, others are returning to investment or dipping their toe in the water for the first time. They are telling us they would like some help to navigate their way to the most appropriate investment for them. They should ensure they speak to an expert who will take into account their appetite for risk and time horizon for investing, rather than opting for whatever offers the highest return."

This need to seek advice really is key, particularly for those who don't know where to start when it comes to investing. It's an incredibly complex business and comes with far more risk than investing in cash, so making sure you're prepared for that is essential. Read our investment guides to get started, and you may want to consider a stocks & shares ISA if you're not confident with all-out stock market investment. Either way, make sure to seek independent financial advice so you can be confident in your investment decisions.

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.