The number of UK adults who chose to invest in financial markets fell last year as economic uncertainty and the high cost of living suppressed the market.

A recent study by Moneybox, based on a survey of 2,000 people in the UK, just one in four (26%) chose to put their money into something other than a regular savings account or Cash ISA last year, a figure down from 32% on 2022 figures.

When asked why they chose not to invest, over a third (36%) said they simply couldn’t afford to, while one in five (22%) also decided to prioritise saving cash because of the high interest rates they were earning.

Moneybox also reported that 19% of UK adults admitted they were not confident they knew how to invest, while 26% chose against it because they were worried they might lose their money.

Despite this, two in five (40%) of those who did invest in 2023, reported feeling more confident about investing than ever before, and 36% of those started investing for the first time last year.

“While people tend to avoid investing when inflation and interest rates are high, many could be missing out on longer term financial benefits as a result,” commented head of personal finance at Moneybox, Brian Byrnes.

“The research shows many people chose to prioritise savings over investments in the last year, with the number of Brits with easy access savings accounts and cash ISAs increasing by 47% and 29% respectively; perhaps understandably, enticed by the highest cash interest rates in over a decade.

“Undoubtedly for some, this may have been a sensible, considered decision, but many may be surprised to learn that only investing rather than cash savings, would have kept pace with inflation throughout 2023.”

Moneybox’s research, conducted in conjunction with OnePoll, also revealed that the cost of living crisis has encouraged 61% of people surveyed to take greater control of their finances and strive to become financially resilient.

When asked about their financial plans for the year ahead, 31% of respondents said they are prioritising building up their rainy-day funds, followed by 12% who said investing – 12% of which will be doing so for the first time in 2024.

“If you already have a rainy-day fund set aside, and you’re looking to the long term, investing is one of the best ways to grow your money over time,” Byrnes added. “Saving and investing should both be viewed as essential components of a financial plan that will help you achieve your short and longer-term financial goals.”

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