Cultivating a cultural shift

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Driving a cultural shift in attitudes towards investment for UK citizens has been a clear priority for the government since coming to power last year, and it has been a priority for the Financial Conduct Authority for even longer.

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More investment, particularly in UK companies, has obvious benefits to our economic growth, but encouraging savers to move from cash to investments is challenging, particularly against the landscape of a cost of living crisis, high inflation, and while we still have favourable interest rates on cash savings. The good news is that a shift towards investment is already happening in Scotland. More than a quarter of Scots chose to invest in the last year, up 4 per cent compared to 2023. And 20 per cent increased the amount they invested last year. More importantly, confidence in investing also rose, to 72 per cent in 2024, up from 42 per cent the year before, among those who are already investing.

Building financial security is the key motivator for the majority of Scottish investors, with 62 per cent choosing to invest in order to grow their money, and bolster their wealth for the future, and 38 per cent investing to help secure a comfortable life in retirement.

Another 38 per cent stated the belief that investing now would help them to achieve their long-term financial goals more quickly. While cash savings are important for anyone looking to build up an emergency fund, and for short to medium-term financial goals, historically, investing has proven to be the most reliable way to offset the impact of inflation and build wealth for the future.

Naturally, once people have built up their emergency savings and feel financially secure, they will feel more confident starting to invest.

Among those in Scotland who currently do not invest, 32 per cent said they don’t feel they can afford to, and19 per cent admitted they were not confident enough to invest.

Therefore, it stands to reason that if we as an industry want more people in the UK to invest, we must do two things. One, help savers build up their resilience so that they feel financially secure and, two, boost financial knowledge and confidence so that when the time is right, savers feel empowered to invest.

My firm Moneybox and other providers are currently working with the FCA to develop new services that will provide customers with more personalised support to help them choose the right products for their individual ambitions and needs.

Change won’t happen overnight, but there are steps that we can all take now to move from saving cash to investing, and build wealth for the future.

Here are three tips for those looking to take this step...

Build financial confidence through small, actionable learning

Dedicate at least 30 minutes per week to financial education. Choose a topic such as investing basics, stock market trends, or tax-efficient investing. Use resources including podcasts, YouTube channels, or online forums to grow your knowledge in an easy, digestible way. The more you learn, the more confident you will feel about investment.

Start small with low-cost diversified investments

If you’re beginning your investing journey, consider “off the shelf” investment options. Most investment providers offer starting options for newer investors. These provide built-in diversification, reducing risk while offering long-term growth. Consider investing a small fixed amount regularly to help smooth out market fluctuations.

Set clear investment goals and automate contributions

Define your short, mid, and long-term financial goals, such as buying a home, retiring early, or building wealth. Set a target amount and timeline for each goal. Use budgeting tools or apps to track your progress and automate investing contributions. Automating even small monthly investments helps you stay consistent and allows you to take advantage of compound growth over time.

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