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Quarter of investors rule out stock market return

Quarter of investors rule out stock market return

Category: Investments

Updated: 23/05/2017
First Published: 28/09/2009

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Despite a surge in the stock market over the last six months, as many as one in four potential investors are currently refusing to consider equity investments.

The FTSE-100 index of leading UK shares has surged by 43 per cent since its low point at the beginning of March, but millions remain unconvinced that placing their money in stocks and shares isn't unduly risky.

However, Prudential, which undertook the research, has said that by ruling out stock market investment at the present time, people who can afford to save are potentially losing out on long term gains which are being delivered by the historically strong performance of shares.

"People shouldn't be put off making sensible long term decisions by short term risk concerns," Trevor Cheal, retirement savings director at Prudential, told Moneyfacts.co.uk. "Equities have to be volatile and periodically have to go down for investors to make attractive long run returns – if they weren't you wouldn't expect to get well paid for holding them.

"Losing money periodically goes with the territory and the losers are those who duck out after a fall."

The equivalent of around four per cent of the population, totalling 1.9 million people, have been put off sinking more of their money into stocks and shares because they have been stung by recent losses.

A further 12 per cent said they had no confidence in the performance of the stock market in the coming 12 months, while another eight per cent claimed to have no confidence at all in the FTSE-100.

"The saying that it is not timing the markets but time in the markets that matters could never be more apt," added Mr Cheal.

"Investors often act irrationally and, driven by fear, they sit out the markets as they begin to recover, missing out on potentially spectacular gains."

Despite this, a quarter of those who currently shun stock market investments believe there is nothing that could convince them to once again begin a FTSE-100 portfolio. A further 32 per cent would only invest money in shares again if they were guaranteed not to lose money.

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