GraniteShares ETP : New research* from ETP provider GraniteShares shows regular UK investors believe savings rates are still not high enough to tempt them to move more money into cash.
Sign up to our free newsletters
Will Rhind, Founder and CEO at GraniteShares
- Just one in three investors have switched more money into cash following base rate increases
- More than six out of 10 who’ve bought shares in the past year have moved money from savings accounts
Its nationwide study found just 35% say they have put more of their investments into cash accounts since the Bank of England started hiking the base rate in December last year with five increases taking it from 0.1% to the current 1.25% with further increases expected.
Base rate rises have triggered intense competition among savings providers with rates being increased regularly – but GraniteShares’ research shows regular investors are not impressed.
Just 4% say they have put a lot more into cash while 31% have put a little more into cash in comparison with shares while 65% say rates are still too low. One of the main reasons for this is that after inflation, interest rates in cash accounts are still firmly in negative territory. The Bank of England recently predicted UK inflation will hit 11% this year.
Most regular investors are using money in cash accounts to fund share trading – 61% who have bought in the past year say they have used money in cash accounts to do so. Nearly half (47%) say they have paid for shares from their salary while 5% have switched from cryptocurrency.
There are some worrying signs in the research with one in 20 (5%) who have bought shares in the past year using credit cards to fund their dealing and 3% saying they have taken out loans.
The research for GraniteShares, which offers UK sophisticated investors a suite of index ETPs tracking FAANG stocks and a suite of Short and Leveraged Single Stock Daily ETPs tracking some of the most popular companies in UK markets, found the main reason regular investors are buying shares is to generate better returns.
Nearly three-quarters (73%) say they have bought shares as they weren’t earning enough from their cash savings. However, 14% say they buy shares in the hope of making a lot of money quickly and 12% say they buy shares because they are bored.
Will Rhind, Founder and CEO at GraniteShares said: “The savings market is moving very quickly with some providers raising rates regularly to tempt customers to switch accounts, but it is not having much effect on regular investors.
“Most are sticking with the potential for better returns on their money from stocks and the overwhelming reason for the popularity of share trading remains the negative returns after inflation available from cash accounts .
“Share trading has become mainstream during the COVID-19 pandemic and that is reflected in the demand for products such as short and long ETPs which provide the flexibility needed to help navigate volatile market swings on both the long and short sides.”
Source: ETFWorld.co.uk
Subscribe to Our Newsletter
