Confidence crisis means investment opportunities missed

AXA believes it could be time for consumers to start investing again, after two key investor confidence indicators rose strongly last month.

New research from AXA shows that 80% of the UK's consumers are currently doing nothing about managing their long term investments and pensions and 63% say they are unlikely to open a savings or investment product in the next few months. In contrast, leading institutional investor confidence indices from State Street and Goldman Sachs are showing healthy increases in optimism around long term investment suggesting professional investors believe now is the right time to invest.

AXA highlights that, historically, investing at the bottom of the cycle has provided huge rewards. For example, according to AXA's analysis of Bloomberg data, those who invested in the FTSE All Share Index after the dot com bubble burst will have seen a 74% return over five years. Those who invested directly after the stock market crash in 1987 will have seen a 57% return in five years. Going further back, after the oil crisis of the mid-70s, investors will have seen returns of 240% over five years. Conversely those who invested in the ‘good times' of 2006 will have seen their investments plummet. Of course other indices will have experienced different returns to the FTSE All Share Index and these numbers represent returns before fees and taxation.
AXA's research also revealed that 60% of consumers believe the downturn will last more than 18 months and 20% more than three years. It also revealed a lack of faith in the Government and the Bank of England to dig Britain out of its recession - 60% of people polled said they are "not at all confident" about rescue plans put in place to date.

Mike Kellard, CEO, AXA Winterthur Wealth Management, said: "People are right to be concerned about the length and depth of the recession. But waiting until the turmoil is over before investing has, in the past, never been the most effective way to make the most from your money, as time in the market is nearly always better than timing the market.

"People should consider their attitude to investment risk, and explore many of the investment opportunities available. There are alternatives to the extremes of cash and equities, which offer some cautious exposure to the markets over the short to medium term. Before proceeding, however independent financial advice is always a good idea."