Over half (55%) of UK adults said they are more concerned about the possible losses than the potential gains from making an investment.
This is according to the LV= Wealth and Wellbeing Research Programme, which also found that 52% of UK adults said that they would be more comfortable putting their money in a bank account rather than investing in shares to take advantage of higher cash rates.
A quarter (25%), however, would accept potential loss in order to pursue long-term investment growth.
Over two-fifths (42%) would be willing to risk a percentage of their capital in order to get a good return on their investment.
When given the option of a product that softens the impact of stock-market volatility, 30% said they would be interested.
Again, 41% of UK adults said that they would be interested in a smoothed investment that aims to soften the impact of stock-market volatility. This rose to 57% for those aged 18-34.
LV= said: “Utilising smoothed investments to help mitigate the volatility of the stock market on the approach to retirement could be a good way of reducing risk to more comfortable levels.”
Due to higher rates of inflation and economic headwinds, over a quarter (26%) of UK adults said they are worried about the future when thinking about their retirement.
Specifically, 28% said that they were worried about being able to comfortably pay bills and day-to-day costs while being on a fixed income.
LV= added: “Being too cautious with long-term investments means that savers risk missing out on future returns and could see values erode due to inflation. However, if investors choose to take on more risk, it could lead to more stressful situations and potentially cause significant losses.”
LV= savings and retirement director David Stevens said: “The latest findings from our Wealth and Wellbeing Research Programme shows that many people are worried about investment losses impacting their retirement savings. However, when it’s explained that smoothed investments work by evening out the peaks and troughs of stock-market volatility, 66% of investors were interested in using them.
“In a volatile world, good investment decisions allow people to live confidently over the long-term to achieve a targeted level of growth and income potential. The worry of investment-market volatility is an understandable deterrent; one that is a real and very human dilemma for many investors.
“For example, those approaching retirement or just starting to enjoy withdrawing their savings may only feel happy to invest with some safeguards in place. Many choose lower risk to protect against the long-term impacts caused by extreme daily drops experienced by some in previous years.
“For people looking to reduce their investment risk, smoothed investments such as LV= Smoothed Managed Funds can help with this conundrum and could be added to a client’s portfolio to reduce stock-market volatility.”
In order to obtain these results, LV= conducted a survey of 4,000 UK adults.
