More than 11.6 million people are keeping all their money in cash despite ongoing low rates, according to research from The Openwork Partnership.
Twenty-two per cent (22%) of adults prefer to keep all their money in cash, 15% said they had a healthy balance between savings and investments, and 14% said they were willing to miss out on higher returns by avoiding stock market investment.
Despite the recent Bank of England base rate rise, rates on cash accounts remain below infla-tion while the FTSE-100 gained 14.3% last year, representing its best performance for five years.
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One potential reason for avoiding the stock market, highlighted by the research, was lack of knowledge – around 11% said they did not know where to go for advice.
However, nearly one in 10 (9%) said they had benefited from financial advice in terms of higher returns on their cash.
Excess savings in the UK, the extra amount people have saved because of restrictions during the COVID-19 pandemic, is estimated to be around £163 billion compared with £112 billion a year ago.
Claire Limon, network director at The Openwork Partnership, said: “It is good news that peo-ple have built up savings and the money will be very valuable given the looming rises in the cost of living.
“But there is a real risk of reckless caution costing people substantial amounts from ignoring stock market investment in favour of keeping money in cash when rates remain at very low levels – meaning savers are losing money after inflation is taken into account.
“It is understandable that people are worried about the risks of losing money on the stock market but advice from a professional adviser can help ensure their money works hard for them and any investments are tailored to their appetite for risk.”