The Consumer – Attitudes and Behaviour toward Long
Term Investing
Key points
●
Interest and
engagement in long term investing tend to increase along with age, affluence
and wealth.
●
Awareness of
investment bond policies is highest among the product’s key target market:
those nearing retirement, the more affluent, and high earners.
A third of consumers agree it is important to save for
the long term
In order to gauge
consumer attitudes towards long term investing, respondents were asked if they
agreed with a series of statements.
“When it comes to your approach and attitude to
longer-term finances, with which of the following statements, if any, do you
agree?”
FIGURE 43: Agreement with
statements about longer-term finances, December 2008
Base:
1,948 adults aged 18+
%
|
|
I think that it
is important to save for the long term future (retirement, etc.)
|
31
|
I like to make
sure I can access my savings at all times
|
30
|
I've heard of
investment bonds
|
28
|
I like to
save/invest on a regular basis (eg every month)
|
18
|
It's a bad time
to consider saving and investing for the long term
|
16
|
I regularly
monitor the performance of my investments
|
16
|
I only invest
in products with guaranteed returns
|
14
|
I'm
disappointed with the performance of some/all of my investments
|
14
|
I'd like to
invest in stocks and shares, but I don't know where to start
|
2
|
None of these
|
17
|
Don't know
|
6
|
SOURCE:
Ipsos MORI/Mintel
The data
presented above are very much indicative of the attitude that the general
British population has towards long term investing. In general long term
investing, and particularly investments that bear a degree of risk, are not a
particularly attractive proposition. And this is especially true at the moment
given the state of affairs on global stock markets.
That being said,
close to a third of consumers in the UK do believe that saving for the long
term is important while nearly one in five also state they like to save or
invest on a regular basis. There is very little interest, as would be expected
in a generally risk averse population, for investments that involve a
significant degree of risk such as equity based investments.
Focusing
specifically on investment bonds it is somewhat surprising that over a quarter
of the population say that they have heard of the product. While the data do
not confirm it, it is very likely that some respondents may have confused
investment bonds with other products, which are also called bonds and more
readily available on the high street. On the other hand, it could very well be
that many people have heard about them because of the negative publicity that
with-profits bonds received at the start of the decade.
Awareness of investment bonds highest for those nearing
retirement
FIGURE 44: Agreement with
statements about longer-term finances by gender, age, marital status, and
lifestage, December 2008
Base:
1,948 adults aged 18+
I think that it is important to save for the long
term future
|
I like to make sure I can access my savings at all
times
|
I've heard of investment bonds
|
I like to save/invest on a regular basis
|
It's a bad time to consider saving and investing for
the long term
|
I regularly monitor the performance of my investments
|
I only invest in products with guaranteed returns
|
I'm disappointed with the performance of some/all of
my investments
|
I'd like to invest in stocks and shares, but I don't
know where to start
|
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
|
All
|
31
|
30
|
28
|
18
|
16
|
16
|
14
|
14
|
2
|
Gender:
|
|||||||||
Male
|
33
|
30
|
31
|
17
|
17
|
18
|
14
|
15
|
3
|
Female
|
29
|
30
|
26
|
19
|
14
|
13
|
14
|
14
|
2
|
Age:
|
|||||||||
18-24
|
21
|
18
|
26
|
19
|
15
|
7
|
6
|
2
|
4
|
25-34
|
25
|
26
|
25
|
16
|
13
|
9
|
16
|
5
|
5
|
35-44
|
42
|
31
|
31
|
24
|
14
|
21
|
14
|
15
|
3
|
45-54
|
39
|
32
|
31
|
22
|
20
|
14
|
14
|
20
|
3
|
55-64
|
37
|
34
|
31
|
16
|
15
|
24
|
14
|
26
|
1
|
65+
|
21
|
35
|
25
|
10
|
16
|
16
|
17
|
15
|
1
|
Marital status:
|
|||||||||
Married
|
35
|
31
|
29
|
21
|
15
|
20
|
15
|
19
|
2
|
Living as
married
|
43
|
32
|
36
|
22
|
21
|
15
|
15
|
14
|
2
|
Single
|
23
|
23
|
26
|
13
|
14
|
9
|
10
|
5
|
4
|
Widowed/
divorced/ separated
|
23
|
34
|
25
|
13
|
17
|
12
|
14
|
13
|
2
|
Lifestage:
|
|||||||||
Pre-/no family
|
29
|
23
|
28
|
21
|
14
|
11
|
12
|
6
|
6
|
Family
|
34
|
27
|
29
|
22
|
14
|
17
|
15
|
14
|
2
|
Third age
|
38
|
35
|
30
|
17
|
18
|
18
|
12
|
22
|
2
|
Retired
|
21
|
35
|
25
|
10
|
16
|
16
|
17
|
15
|
1
|
SOURCE:
Ipsos MORI/Mintel
A higher level of
awareness of the existence of investment bonds among older people who are close
to retirement age is evidence of the product’s value as a tax-planning tool for
people making the transition into retirement, and also its relevance as a way to
mitigate IHT if one is planning on leaving a particularly large estate.
People investing in collectives may find bonds
attractive as they near retirement
Since investment
bonds are usually only appropriate for an older and much more affluent target
market with specific tax needs, there really is not much scope for selling them
to younger investors, unless of course they are exceptionally wealthy or have
received a particularly large inheritance. The reality is that for most people
collective investments held within an ISA are likely to be a much more
practical investment choice.
On the contrary,
however, this does not mean that younger investors, who are in the process of
building up their wealth, should not be made aware of the potential advantages
of investment bonds. As an individual’s financial circumstances can change
throughout life, and especially as they move closer to retirement age (perhaps
deciding to retire abroad), it is very likely that someone who may have been
investing directly in collective investment funds might eventually find doing
so through the investment bond tax wrapper advantageous.
Affluent most conscious of the value of long term
saving
FIGURE 45: Agreement with
statements about longer-term finances, by socio-economic group, working status,
gross annual household income and ACORN group, December 2008
Base:
1,948 adults aged 18+
I think that it is important to save for the long
term future
|
I like to make sure I can access my savings at all
times
|
I've heard of investment bonds
|
I like to save/invest on a regular basis
|
It's a bad time to consider saving and investing for
the long term
|
I regularly monitor the performance of my investments
|
I only invest in products with guaranteed returns
|
I'm disappointed with the performance of some/all of
my investments
|
I'd like to invest in stocks and shares, but I don't
know where to start
|
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
|
All
|
31
|
30
|
28
|
18
|
16
|
16
|
14
|
14
|
2
|
Socio-economic group:
|
|||||||||
AB
|
47
|
32
|
40
|
26
|
16
|
28
|
19
|
28
|
3
|
C1
|
35
|
33
|
31
|
20
|
14
|
16
|
15
|
13
|
3
|
C2
|
22
|
28
|
20
|
13
|
17
|
10
|
12
|
10
|
2
|
D
|
20
|
26
|
19
|
11
|
17
|
6
|
9
|
5
|
1
|
E
|
11
|
25
|
18
|
9
|
12
|
7
|
7
|
4
|
0
|
Working status;
|
|||||||||
Working
|
37
|
30
|
31
|
22
|
15
|
16
|
15
|
16
|
3
|
Full time/self
employed
|
39
|
29
|
32
|
23
|
14
|
16
|
16
|
16
|
3
|
Part time
|
30
|
31
|
25
|
19
|
15
|
19
|
11
|
15
|
3
|
Not working
|
24
|
25
|
23
|
15
|
18
|
10
|
7
|
7
|
4
|
Retired
|
22
|
34
|
26
|
11
|
16
|
18
|
16
|
17
|
1
|
Gross household annual income:
|
|||||||||
Under £15,499
|
23
|
31
|
23
|
13
|
16
|
11
|
14
|
7
|
4
|
£15,500-£24,999
|
34
|
36
|
24
|
13
|
18
|
11
|
15
|
10
|
1
|
£25,000-£39,999
|
44
|
43
|
33
|
28
|
21
|
21
|
13
|
22
|
1
|
£40,000-£49,999
|
45
|
37
|
40
|
26
|
13
|
16
|
17
|
18
|
3
|
£50,000 or more
|
69
|
34
|
39
|
41
|
7
|
41
|
19
|
33
|
6
|
Don't know
|
14
|
17
|
18
|
10
|
16
|
8
|
9
|
6
|
2
|
Refused
|
19
|
24
|
31
|
14
|
15
|
13
|
13
|
14
|
1
|
ACORN groups:
|
|||||||||
Wealthy
Achievers
|
45
|
36
|
32
|
26
|
17
|
27
|
16
|
22
|
3
|
Urban
Prosperity
|
24
|
18
|
35
|
16
|
6
|
17
|
15
|
11
|
2
|
Comfortably Off
|
34
|
31
|
33
|
20
|
15
|
14
|
17
|
16
|
1
|
Moderate Means
|
24
|
30
|
24
|
14
|
16
|
12
|
11
|
10
|
3
|
Hard Pressed
|
25
|
29
|
21
|
14
|
19
|
11
|
12
|
11
|
3
|
SOURCE:
Ipsos MORI/Mintel
●
People
from more affluent sections of the population are much more likely to identify
the importance of long term savings. This is very much a reflection of their
above average financial sophistication and understanding of the principles of
building wealth
●
As
expected, they are also much more active investors, with many saving regularly
and actively monitoring the performance of their portfolio.
●
The
data also show that the people most likely to be in the market for an
investment bond, high earners and more affluent individuals, are also the most
likely to be aware of investment bonds.
●
This
is naturally evidence of the product’s appeal to high net worth individuals who
may be looking to take advantage of the specific tax benefits, which can enable
investors to avoid or defer tax, offered by investment bonds.
Broadsheet readers more confident and active investors
FIGURE 46: Agreement with statements about
longer-term finances by newspaper readership, technology usage, internet usage
frequency and web usage, December 2008
Also read Investment Bonds Market in UK Report, Contact Mahasagar Publications. Also Read Consumer Attitudes towards Financial Services and Advice.
