ISAs - Appetite for risk increases as investors seek returns
New research from discount broker Willis Owen confirms that more than half (54%) of all GB adults are willing to take some financial risk with their savings and investments, despite the recent financial turmoil.
The YouGov poll highlights that 17% are willing to take a reasonable degree of risk, if there is a good chance of a return. More than a third (37%) will take some risk but will generally look for the safest type of investment. The new research coincides with the launch of Willis Owen's ISA guide for 2010, which provides investment options to suit a wide variety of risk profiles for investors.
Alan Easter, Director of discount broker Willis Owen, said: "With general savings rates at historic lows and cash ISAs seen as poor value, people are looking further afield for better returns. Retail fund sales reached £25bn last year, the highest figure on record. With the prospect of creeping inflation eroding the real value of savings even further, it's important that people make their money work harder.
"This ISA season, there are a wide variety of options open to investors depending on their appetite for risk. From cautious funds that invest at least 30% of their funds in fixed interest assets and cash, to more adventurous funds that hold different stocks in companies around the world. If you are willing to run the risk, the potential rewards are there for the taking."
The ISA guide has a variety of funds including:
The Neptune Global Equity fund, for investors seeking capital growth from global equities where there is often reasonably high exposure to the higher risk markets of Asia and Emerging Markets
The CF Miton Special Situations fund, for investors seeking capital growth from a fund invested in a range of different asset classes where allocation between the assets is the main consideration but with a core in lower risk assets to reduce volatility; and
The Invesco Perpetual Distribution fund, for investors seeking a balance of income and capital growth from a combination of UK equities, fixed interest and cash with a minimum of 60% held in fixed interest and cash to help lower volatility
Alan added: "There are ways to limit the risk you take with your investment. At a minimum you should invest with a five year investment horizon, which should hopefully allow you to ride out any possible short term market dips. Second, you can diversify your investment by buying funds within your ISA rather than individual shares. You could diversify further by choosing a multi-manager fund, whose manager will buy funds run by other managers. The aim of this is to access the expertise of the world's best investment talent. These help to spread your investment risk."
Battle of the sexes
The figures also show that men have more appetite for risk with nearly two thirds (62%) of men compared to less than half (47%) of women willing to take some financial risk with their savings and investments.
Alan added: "While it may fit the stereotype that men will take more risks than women, women are not too far behind. We have seen a continuous rise in the number of female investors on our site in recent years."
As a leading discount broker Willis Owen offers low charges and an extensive choice of investments to hold within an ISA. The majority of its funds have no initial charge so investors pay nothing up front.
Alan concluded: "We offer three routes to make the most of your ISA allowance. If you are unsure how to pick, manage and maintain your investments on an ongoing basis then multi-manager funds may be the best option. If you want to actively manage your portfolio then you can invest in individual funds including income funds, property funds or ethical funds. If you are unsure where to invest right now but don't want to lose your allowance then you can use the Cofunds Cash Reserve. You can invest up to your full ISA limit and when you feel the time is right you can select the funds that are suitable for you."
The Willis Owen annual ISA guide is available at willisowen.com where investors can also sign up to a free investment check-up to see how their investments are performing.