5 million over 50s expected to open a new ISA in 2017
Many people look to their savings to boost their income as they move towards retirement or retire completely, but even though savers continue to be punished by ultra-low interest rates, the over 50s continue to believe that cash is king when it comes to their ISA allowance according to new research by Saga Investment Services.
When asked about their ISA plans, a quarter say they plan to open a new ISA in 2017. Amongst those who plan to take advantage of a tax free account a third say they will look at a stocks and shares ISA, but almost half say they will be opting for a cash ISA. One in five say they will be looking to open both a cash and a stocks and shares ISA.
There are big differences between the sexes when it comes to choosing between cash and investing, with women strongly favouring cash over shares ISAs (58% vs 27%), there is a more balanced view amongst men with 41% wanting cash and 38% shares ISAs.
Regionally, there are also big differences in opinion; more than twice as many Londoners are willing to take out a stocks and shares ISA (39%) than those in the North East (24%), While those in the north east (61%), Yorkshire and the West Midlands (53%) are the most likely to opt for cash ISAs.
Just 2% of over 50s say they will be looking to open a stocks and shares ISA for the first time and for more than three quarters of these people, low interest rates are the reason behind their decision. While one in ten say they have inherited some money which they would like to invest.
Commenting on the results of the survey, Sally Merritt, head of product for Saga Investment Services said: “Savers have had it extremely tough over many years now and yet many still feel uncertain about making the switch to investing. This is largely because people don’t know quite where to start and they are wary of the risk. However, people need to make their money work harder for them – not just to give them a higher level of income, but also simply to stop their money losing value in real terms. Ultimately, holding cash which earns less interest than the rate of inflation means that people are losing spending power. And the compounded effect of this over a number of months or years could be much bigger than they realise.
“If people have a good cushion of cash savings, say enough to cover 6-12 months' worth of living expenses, then it may make sense to try investing with some of their additional cash savings. Investing should be a long term plan, we suggest 3-5 years as a minimum to help even out the rises and falls in the market.
“We are trying to demystify investing for people, talking to them in plain English and getting them to understand that there are different levels of risk and reward. There is an option for people to move cautiously up the risk profile to make their money give them a better income and with our ready-made portfolios people can very clearly choose the level of risk that suits them and then have peace of mind knowing that our experts are running the underlying investments on their behalf for as long as they continue to hold them.”