Interactive Investor

One in four stop contributions to long-term investments

6th April 2022 10:01

Rebecca O'Connor from interactive investor

Rising cost of living forces cutbacks, interactive investor poll finds.

  • Respondents were most likely to have stopped paying into stocks and shares ISA and least likely to have stopped paying into Junior ISAs

A snap poll has found that nearly a quarter (24%) of people have stopped paying into a long-term investment account to cope with the rising cost of living.

When asked ‘Have you stopped contributing to any investments or savings because of the rising cost of living?’, 76% of people said they were continuing to invest as before, according to the poll from interactive investor, the UK’s second-biggest platform for private investors.

However, in a week of tax hikes and energy bill rises, 8.5% said they had stopped contributing to their stocks and shares ISA, 5% had stopped contributing to their pension, 5% to their savings account and 4.5% to their general investment account. Only 1% said they had stopped contributing to their children’s Junior ISA.

Becky O’Connor, Head of Pensions and Savings, interactive investor, said: “It’s heartening that most people appear to be persisting with their long-term investments, despite the soaring cost of living.

“However almost one in four have already made some cuts to their usual ISA, pension or investment account contributions, which is a significant proportion. This may be an indicator of how bad things have already become, as well as how high people expect living costs to go over the coming months.

“It’s understandable given the current outlook for household budgets – as well as the knowledge that things will most likely get worse before they get better, that people are looking to make cutbacks wherever they can. But it’s important not to cancel long-term investments on a whim and to look at other possible areas to roll back on first. Future financial security is important and in cutting back on things like pension contributions now, people may be storing up difficulties for the future.

“This poll suggests that stocks and shares ISA contributions are first on the list of investments to scale back, followed by savings account deposits, then pensions, general investment accounts and last of all, Junior ISAs. Investors appear most reluctant to surrender contributions to their children’s Junior ISAs, suggesting that they are prioritising their kids’ future financial security above their own.

“Anyone who has pressed pause on long-term investing for the time being needs to set a diary reminder to keep reviewing whether they are able to start again. It can be easy to forget resuming investments once you have fallen out of the habit or cancelled a direct debit. But it’s vital for anyone with a bit of spare cash left at the end of the month to put that to work and continue to keep one eye on future needs, even while current needs are so pressing.”

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