One in three investors sitting on cash ahead of EU referendum

18 May 2016

The overriding view on the EU referendum re: the UK possibly leaving Europe in all the press, including Moneywiseis one of uncertainty. Simply put, nobody really has a clear idea what will happen if we leave – both in the short-term and the long-term.

But you don’t need to take the word of just the press – a recent survey carried out by Moneywise’s parent company Interactive Investor shows that one in three investors – so people who would otherwise invest money rather than save it – are keeping hold of cash while they wait to see what happens.

The poll asked over 9,000 private investors, 31.2% of whom said that the referendum had an impact on their decision to invest.

This could represent an investing opportunity – as Rebecca O’Keeffe, head of investment at Interactive Investor says: “The number of investors sitting on cash represents a significant amount of liquidity that will be looking for investment opportunities should the EU referendum result go the right way for markets.  In contrast, a vote to leave could hit the market as a nasty surprise.

“With the Federal Reserve decision due on 15 June and the EU referendum a week later, the prospect of increased volatility over the coming weeks is all but certain. However, this should provide significant opportunities for active traders and engaged investors who may be able to capitalise on this uncertainty.”

With interest rates continuing at their all-time low, many people are starting to look at investing over saving. Equity income investment funds offer higher annual incomes of 3% or more and have the potential to grow your capital, alongside the risk of losing it too.

In fact, stock broker Selftrade found in April that a massive 62% of savers keep their money in cash only – which equals £735 billon in total. While cash is a safer home for your money, you’re also throwing away the chance to grow your wealth over the long term. The average annual return on a cash Isa since 2011 was a measly 1.86%, according to March 2016 research from Prudential.


Richard Donegan, director of Selftrade, says: “If you are looking at the stock market for the first time don’t be put off by recent market conditions. No one can predict with any degree of certainty, which way the stock market will move at any given time; but history shows that if you are investing over the long term, shares (or equities) are one of the best long-term investments in the financial market place. They tend to outperform government bonds, corporate bonds, property and many other types of asset, most particularly cash”.

If you want to get involved with investing, check out our guide to investing and our article on how to choose the right trading platform.

The research from Selftrade also showed that 25% of people are put off investing because they don’t understand the stock market. If you count yourself among these people, our Coffee break investment guide will get you on the right track.

Add new comment