Cost of the investment crisis! Nearly half of investors are selling stocks to cover rising bills and a third are forgoing ethical investing.
- Investors under 40 are more likely to sell stocks than older people
- Men show a greater tendency to liquidate their investments than women
- Some 34% of shareholders surveyed said they had disposed of ethical actions.
Nearly half of private investors have cashed in shares to cope with rising household bills over the past year, new research reveals.
Investors under the age of 40 were more likely to sell shares than older people, and men were more likely to liquidate their investments than women.
People with between £500 and £10,000 in shares were more likely to redeem due to cost of living pressures, while those with less than £500 or more than £10,000 were more inclined to stay in the market , according to the survey carried out by equalizer
Financial Pressure: Investors are changing behavior as daily bills rise and markets crash
Some 34 percent of shareholders surveyed said they had shed ethical stocks in favor of ones with higher expected returns in the past year.
Younger people were more likely to do so, with 43 percent of people ages 18 to 40 adopting this strategy versus 23 percent of people ages 41 to 75.
The rising rate of inflation, which hit 9.9 percent in August, and turbulent stock markets have influenced people’s financial behavior as they struggle to make ends meet.
Older pension investors trying to protect their retirement funds are taking much smaller, tax-free lump sums at a later age, but their income withdrawals to finance day-to-day expenses have increased.
And the number of people who opted out of workplace pension plans jumped 29 percent over the summer, other research showed.
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EQ, a provider of share registration and other technology services, found that about 44 percent of private investors sold shares in the past year to help pay their bills.
This rose to 56 percent among those 40 and younger, but fell to 30 percent in the 41-56 age group and 29 percent among those 57-75.
It’s important for investors dipping into their boats to cover bills to think about how they’re going to replenish those funds.
Meanwhile, 46 percent of men dumped some of their stock and 41 percent of women.
“Investors typically look to invest with a long-term horizon to build wealth, but the current economic environment means that many people are being forced to break their plans,” says Thera Prins, executive director of UK shareholder services at EQ.
“Inflation is at its highest point in 40 years, which is putting enormous pressure on household finances, so it’s no surprise that many people are looking to make up the shortfall by selling their investments.
‘There’s nothing wrong with that, but it’s important for investors dipping into their boats to cover the bills to think about how they’re going to replace those funds when the financial pressure eases.
“Ask any expert and they will tell you that the best strategy for building long-term wealth is to leave your money in the markets for the long term.”
Prins notes that private investment has boomed in the last two years as people looked to beat low interest rates and benefit from the market’s post-pandemic recovery, but now it seems that enthusiasm is waning.
“While we may see a contraction, especially among younger investors who no longer have the additional funds to invest in stocks, this is not the end.
“Once this cost-of-living crisis is over, we may see more of an evolution of the retail investment landscape and a continuation in younger, hungrier investors.”
EQ surveyed 2,000 people over the age of 18 who live in the UK and own shares.