New investment habits set to outlast lockdown

In the past 18 months, many Britons have saved more money than usual as the closure of the economy reduced spending. Many canny investors have been channelling their savings into increased investment contributions.

New research1 suggests that the majority of UK investors (76%) intend to keep up higher levels of contributions, with half saying they intend to sacrifice everyday spending to continue doing so. On average, post-lockdown investors plan to invest nearly a fifth (19%) more, increasing to 36% more for younger investors. Just 6% plan to reduce their contributions.

While the number of investors has surged during lockdown, many experts assumed that this would reduce as restrictions (and lockdown boredom) were lifted. This has not been the case however, especially as many savings accounts have continued to offer poor returns as interest rates remain low.

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Historically, investments have performed better than cash deposits in the long term. While returns on your investments are never guaranteed, building a diversified portfolio may be a smart move while interest rates remain so low.

1Barclays Smart Investor, 2021

The value of investments and income from them may go down. You may not get back the original amount invested. A pension is a long-term investment. The fund value may fluctuate and can go down. Your eventual income may depend on the size of the fund at retirement, future interest rates and tax legislation.