Dramatic drop in investor confidence

The most recent wave of research from Standard Life has shown a significant fall in confidence in the savings and investment market.

The overall score in Wave 10 of the Standard Life Savings and Investment Index has decreased significantly since last wave, plummeting from 20 down to 11. This matches the previous all time low recorded in July 05 when research first began. It reflects a marked change in sentiment towards property and stocks and shares in particular.

Investment in one’s own property has always been the most popular class by a clear margin since Standard Life first conducted its research. In October last year, it stood at a high of 62 points. It still has top place, but has dropped 48% from 46 points in July 07 to 24 points today, edging much closer to more basic savings categories such as cash and short term deposits at 20 points.

Buy to let property has suffered an even sharper drop, tumbling from 23 points in July to 0 now. In October last year, buy to let stood at 41 points. Stocks and shares are now the least popular choice, hitting a lowest ever Index score of -10.

ISAs remain the top choice of investment vehicle, with occupational pension schemes, personal pensions and SIPPs continuing to take second, third and fourth places.

Trevor Matthews, Chief Executive, UK Financial Services, Standard Life said, “These are dramatic results. It’s clear that the recent credit crunch and market volatility have affected people’s confidence. Our research shows that there is now a substantial veering towards the less risky cash and short term deposits. At a time like this I believe it is important to remind people not to lose sight of the big picture and to continue to adopt a long term perspective about assets such as property and stocks and shares."

Of those who are saving, it is clear that the current market uncertainty has affected their intentions. The research data shows that the number of people saying that they plan to save less has increased (up from 9% to 11%); the lowest ever number say that they intend to save more over the coming year (31%); and the highest ever number say that they intend to save the same (45%).

More worryingly, 45% of people are not saving at all.

Trevor Matthews commented, “45% of people aren’t saving for their future. That’s a concern, especially when you add to that the fact that the UK has the highest personal debt levels in Europe. I feel strongly that as an industry, we must work to make it as easy for someone to save as it is for them to borrow.”