Millions of people in the UK could be heading for difficulties later in life, as research has suggested that poor understanding and low take-up of long-term investing could risk their financial security.

Investment platform, InvestEngine, has warned that more than half (56%) of UK adults have stopped saving or investing amid the cost of living crisis.

InvestEngine’s findings have drawn on research across European markets, Freedom of Information requests to the UK Government, and third-party research. The research, which was based on separate studies among 2,000 UK adults and 2,000 German adults for comparison, has found that people in the UK are lagging behind when it comes to knowledge and adoption of investing.

Around half (48%) of adults in Germany, said they would prefer to invest their money than save it, compared to only a third (33%) of adults in the UK. Specifically, just one in seven (14%) adults in the UK have a stocks and shares ISA – a figure equivalent to 6.6 million adults.

InvestEngine also suggested that financial education in the UK is “lacking”. The group’s research revealed that more than half (55%) of adults in the UK – equivalent to nearly 26 million people – either disagreed or were uncertain if investing money offered better long-term returns than cash savings, despite evidence showing this to be the case.

Furthermore, three in five people (61%) felt their own education did not equip them with enough understanding of how to invest and their money. Most respondents (68%) said they had to self-teach when it comes to managing their finances, with 73% of middle-aged adults – those aged between 35 and 54 – saying they wish they’d started investing or saving at a younger age.

Head of investments at InvestEngine, Andrew Prosser, said: “Change is badly needed, both in terms of our culture towards personal finances, and in the role that industry and government can play in facilitating that change.

“When it comes to growing your wealth through investing, the best route for many will be via ‘little and often’ investing through an ISA, utilising diversified and low-cost funds like ETFs.”

InvestEngine has called for ISA and financial education reforms ahead of the Government’s autumn statement on 22 November.

The group wrote to the Treasury to specifically call for a single, all-purpose ISA account for both cash savings and stocks and shares, simplifying the process of moving funds into investments and avoiding confusion over managing multiple accounts.

InvestEngine has also suggested renaming ISAs as “tax free accounts”, to make clear the main benefits of using them in order to increase engagement.

Prosser added: “As the autumn statement approaches, we’re encouraged to see the UK Government exploring ways to simplify the ISA landscape to make it easier for people to save and invest, but there needs to be further action to simplify the ISA system and boost financial literacy.

“This will be crucial if we’re to ensure more people can achieve greater financial security later in life.”

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