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Nearly one in 10 adults ‘have started investing for first time during pandemic’

Vicky Shaw, PA Personal Finance Correspondent
·3-min read

Nearly one in 10 (9%) adults have started investing for the first time since the start of the coronavirus pandemic, a survey has found.

Eighteen to 24-year-olds are particularly likely to have turned to investments for the first time, with 16% having done so, according to Halifax Share Dealing.

Low interest rates in the cash savings market may be prompting more people to consider investing.

But while the rewards from investing may be potentially higher, the risks may also be increased, and people could end up losing money.

The Financial Conduct Authority (FCA) recently warned that a newer, younger group of investors, some of whom are getting involved in schemes such as cryptocurrencies and foreign exchange, could be taking on big risks.

The newer group are more likely to use social media and channels for tips and news, the FCA said.

Investment and pensions scammers are also preying on people looking for higher returns in the tough economic conditions – and people could end up losing their life savings to criminals.

The Halifax Share Dealing survey found that having more spare time was the main factor for people becoming interested in investments.

Nearly a quarter (24%) said they had more time to research options and about one in six (16%) had more time to arrange investments.

Having more disposable cash, perhaps from spending less on commuting and socialising over the past year, was also a factor for nearly one in five (17%).

Out of those who had more extra money, the most popular investment options were bonds (16%) followed by stocks and shares (14%) and trusts (10%).

Existing investors had also been influenced by the pandemic.

Nearly one in five (19%) had increased their investments since the start of the pandemic, and the same proportion had diversified their investment products during this time.

Despite this boost in engagement with the stock market, one of the biggest barriers for those who had not started investing was being scared of losing money, which was putting off almost two in five (39%) of people.

This is followed by not knowing enough about the stocks and shares market (34%).

Nearly half (49%) of women said they were too scared of losing money to invest versus 30% of men.

Women were also more likely to say they did not know enough about the stocks and shares market to invest, at 42% of those who had not invested versus 25%.

Those who are interested in investing may want to consider getting independent financial advice from someone who is suitably qualified.

Manuel Pardavila-Gonzalez, managing director, Halifax Share Dealing, said: “Lockdown has been a challenging experience for many households, however, there have been some positives such as the opportunity to save money on day-to-day spending and to think more about long-term finances.

“Although no investment is risk-free, this spike in trades suggests that people with more spare time and cash have used it to start dipping their toe into the world of investment or increase their portfolio.

“We saw record numbers of trades on our platform throughout lockdown as people turned to the stock market for financial planning for the future.

“Our research showed that stocks and shares are among the most popular investment options, and we’ve seen that banking, utilities and travel companies were some of the most sought after sectors.

“Investing in global firms has become more popular, particularly American companies, although the majority are still investing in UK businesses.

“Taking the first step into investing may feel daunting for some people, most commonly because they don’t feel like they know enough about stocks and shares.

“However, putting some time aside to research and even starting with around £20 a month could not only help build up people’s confidence as investors, but also help people reach their financial goals over the longer term.”

More than 2,000 people were surveyed across the UK in February.