More than one in four (27%) UK adults with at least £25,000 in investible assets believe that stocks and shares are too risky an investment, while many admit a lack of understanding to invest effectively, Rathbones has found.

The wealth and asset management group’s survey of more than 3,000 UK adults revealed that 28% lack the know-how to manage investments themselves, despite the government’s push to turn Britain into a nation of investors.

Nearly one in five (19%) said they don’t know what current savings interest rates or investment return levels are, while 32% are willing to take a high level of risk in pursuit of stronger returns.

Rathbones stated its findings suggest that while many people recognise the importance of investing for long-term financial wellbeing, misconceptions around risk and a lack of investment confidence continue to act as barriers.

Data from HMRC shows there is a preference for cash savings, with 66% of all subscribed adult ISAs in the 2023/24 financial year being for cash ISAs.

Savers contributed approximately £69.5bn to cash ISAs during the year, more than double the amount invested into stocks and shares ISAs (£31.1bn).

Senior investment director at Rathbones, Isabella Galliers-Pratt, said that cash and investing should "not be viewed as competing options", as both have an important role to play within a well-structured financial plan.

She added: "Risk is one of the most misunderstood aspects of investing. Many people assume that avoiding investments altogether is the safest option, but risk comes in different forms.

"We regularly meet people from a wide range of backgrounds and wealth levels who are concerned about investment volatility yet may underestimate the impact inflation can have on the long-term purchasing power of cash savings. While cash can feel secure because its value does not fluctuate day to day, over time inflation can steadily erode what that money can actually buy.

"Understanding risk is not about encouraging people to take bigger chances. It is about helping them understand the trade-offs involved in different financial decisions and the long-term consequences those choices may have. The decision to hold large amounts of cash carries risks of its own, just as investing involves periods of market volatility."

The firm’s research found that younger generations are increasingly willing to engage with investing but may not always feel equipped to do so.

Three in five (60%) adults aged between 30 and 44 say they are happy to take higher levels of investment risk in pursuit of higher returns, compared to just 17% of those aged 65 to 80.

More than half (53%) of younger adults also say they are comfortable in investing in higher-risk assets such as cryptocurrencies and venture capital trusts, but 36% believe they lack the know-how to invest themselves.

Investment manger at Rathbones, Ruth Bussey, concluded: "Many people still view investing as something separate from saving, rather than as an integral part of a broader long-term financial plan.

"If we want more people to feel confident investing, financial education has to be part of the solution. That means helping younger generations understand saving and investing from an early age, while also ensuring people of all ages have access to the information they need to make informed financial decisions. Building a nation of investors starts with building a nation of financially informed investors."

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