Brits to take advantage of stock market volatility

Over 15 million Brits (34 per cent) have dabbled in equity markets and a further 6.6 million (15 per cent) are considering taking advantage of current lower market valuations and investing in the stock market, according to new research from Abbey Savings.

However, a significant number of Brits have been put off investing in equities by the recent market volatility. 26 per cent (11.9 million) say they would never invest in the stock market and 15 per cent (6.7 million) say they are less likely to buy shares given recent market movements.

Interestingly, 56 per cent of Brits would be more likely to invest in the stock market if they had some sort of capital protection i.e. a guarantee against falling markets, however just 44 per cent were aware of the existence of this type of savings product, according to Abbey’s research.

Reza Attar-Zadeh, Director of Savings and Investments at Abbey, said: “Guaranteed investments offer the potential for higher returns based on stock market growth, but also provide capital protection against a further market downturn. Our research shows that 49 per cent of people would consider investing in such products in addition to a normal savings account, which we believe is a great way to maximise tax free savings allowances and gain access to potentially high stock market returns.”

Abbey’s research also reveals that those living in Wales and the South West are most likely to invest in the stock market, with 33 per cent currently having stock market investments, compared with just 19 per cent of those in Scotland and 29 per cent in the South East.

52 per cent of investors decide what to invest in by reading the newspapers. A further 36 per cent take advice from a financial adviser, 32 per cent take online stock tips, 12 per cent ask their friends what to invest in, 10 per cent rely on their families to tell them where to invest and 5 per cent adopt a completely random stock-picking strategy e.g. investing by name of company etc.

Abbey has launched a new Super ISA (Issue 2) with a market leading 10 per cent AER tax-free rate. The Super ISA is a cash ISA and is available if customers put an equal amount or more into Abbey’s tax efficient Guaranteed Growth Plan or any other qualifying investment.

The Super ISA also allows transfers-in so that savers can take advantage of getting the best rate for all their ISAs. This coupled with instant access provides savers with a highly attractive tax-efficient solution. Deposits in the Guaranteed Growth Plan are invested for the longer term offering a minimum return of either six per cent (on 3.5 years) or 18 per cent (six years), plus capital is guaranteed regardless of whatever happens to the stockmarket.

The Guaranteed Growth plan also offers the potential for capital growth through offering savers the greater of either the minimum guaranteed return or 50 per cent of any growth of the FTSE 100 index. This approach is particularly suitable for those who wish to invest in the stock market, but are concerned about potential downside or market volatility.

Abbey has a strong track record in structured products, winning the Moneyfacts Best Structured Product Provider Award 2007.

For more information, visit abbey.com.