Half of British savers are suffering from Investophobia

The information provided in this article was accurate at the time of publishing and should be read in the context of the date it was published. Views in this article are those of the author alone and do not necessarily represent the view of Scottish Friendly.

Inflation can be the big enemy of savers, eroding the value of their hard-earned money. Even if inflation ticked along at the level the Bank of England tries tirelessly to keep it at (2%) it could nonetheless have a significant impact over time on money sitting in cash if interest rates are lower than inflation.

Currently1, inflation is 2.4% and the very best easy-access cash savings rate paying just 1.33%2. Why then do savers not act and switch some of the money they have in cash to other investments which could potentially generate higher returns above inflation? One reason might be a phenomenon we have called ‘investophobia’.

A study3 carried out by Scottish Friendly recently found that half of all British savers are now suffering from ‘investophobia’, opting to leave their money in cash despite the reality of rock bottom rates.

A phobia can lead people to make decisions that aren’t easy to understand, or which may indeed appear to be irrational to an outsider. Scottish Friendly’s findings suggest that many savers may be acting in a similar fashion when it comes to investing.

Indeed, more than two-thirds of the savers in the research are aware that interest rates on savings accounts are less than the current rate of inflation, but the fact that they are losing money in real terms seems to do little to change their minds. Furthermore, 53% of respondents said they wouldn’t consider investing in stocks and shares even though inflation reduced the value of the money they have in secure cash savings.

Why such behaviour? The most common reason cited by almost half of respondents was the fear of losing money via investing. Certainly investing is not without risk and the value of investments can go down as well as up.

Investing doesn’t have to be scary, or complicated, or only for the wealthy; it’s for everyone. It is a tool that is readily available to all that could help empower financial well-being, and while it is different to simply having your money in cash in the bank, it could at the very least be worth considering for those who want to stand up to inflation and try and overcome it.

To find out lots more about ‘investophobia’, including a great video from Money Writer and Broadcaster, Simon Read, just click on the image below.

  1. Consumer price index, May 2018
  2. Survey of 2,000 UK savers who contribute to the financial planning decisions made in their households. Survey conducted by 3Gem between 4 April and 8 May 2018
  3. The Post Office Online Saver (Best easy-access savings account, MoneySavingExpert.com – June 2018







No advice has been provided by Scottish Friendly. If you are in any doubt as to whether a savings or investment plan is suitable for you, you should contact a financial adviser for advice. If you do not have a financial adviser, you can get details of local financial advisers by visiting www.unbiased.co.uk. Advisers may charge for providing such advice and should confirm any cost beforehand.