Playing it safe will lose you money, warns ArchOver

By Ryan Weeks on 12th March 2018

P2P/Marketplace Lending

ArchOver report highlights the extent to which savings are still preferred to investments.

Playing it safe will lose you money, warns ArchOver

A new report from peer-to-peer lending firm ArchOver paints a picture of a cautious British public that could be losing out by playing it safe.

The Next Gen: Investors and Savers report, which contains survey data on 2,000 UK adults, revealed that 67 per cent would describe themselves as “savers” rather than “investors”, while putting aside £191 a month on average.

“People like to go with the status quo, and they’re attracted by the protection you get with traditional savings accounts,” said Angus Dent (pictured), CEO of ArchOver. “However, leaving your money lying around in a savings account for years on end is not going to help people reach their goals in the long-term. In reality, savers need to diversify their portfolios and look for alternative ways of making their money grow that balance security and opportunity.”

Dent’s comments come after ArchOver’s research discovered that most respondents are saving for a specific purpose, such as the reassurance of having a “rainy day fund” (66 per cent), financing a new car or a holiday (29 per cent) or funding their retirement (27 per cent).

More than half (57 per cent) ArchOver’s respondents associate savings with security. A massive 83 per cent are relying on traditional savings accounts for building up their nest eggs, with 43 per cent and 44 per cent looking to ISAs and pension funds respectively.

The chief reason for Dent’s rebuke is his belief that in the current low interest rate, high inflation environment, savers risk losing money in “real terms” – irrespective of the presence of security blankets like the Financial Services Compensation Scheme (FSCS).

RateSetter boss Rhydian Lewis has been preaching a similar sermon for years. In August 2017, his firm voiced its support for the “Saving Better” report, which suggested savers could be missing out on billions of pounds by spurning investment opportunities.

At the heart of the issue is the fact that people are naturally cautious with their money. According to ArchOver’s research, on inheriting a large sum of money, 46 per cent of people would deposit it in a savings accounts, versus 30 per cent in an ISA. Just 9 per cent would consider using a large chunk of the inherited cash to invest in stocks and shares.

But that caution is contradictory. As Dent explained, cautiousness “is at odds with what savers claim to be thinking about, which is seeing their money grow”.  

A paltry 4 per cent of ArchOver’s respondents are currently using P2P or crowdfunding platforms to invest.  

ArchOver is a secured and insured peer-to-peer lending platform for business borrowers in the UK. Its report, Next Gen: Investors and Savers, can be downloaded here

Comments

AltFi London Summit 2019

The UK's oldest and best-loved conference for fintech and alternative finance insiders returns for its sixth iteration at etc.venues. We'll showcase the best of the UK's digital banking, online lending and digital wealth sectors through a series of uniquely in-depth discussions and presentations. Open Banking will be in full flight, just over a year on from its launch, and will be a central theme at the event.

18th March 2019