Investing can be a sensible and effective way of maximising your income and making sure your money is working hard for you.
So why don’t more of us do it?
Well, a new study by Lloyds Bank has found that fear is one big reason, as nearly half of those without investments are unwilling to risk losing money. But fear is often the result of a lack of understanding, and this was cited as a big reason by 31 per cent of those polled.
Financial jargon in particular is a big barrier, with 38 per cent of people admitting they’re baffled by complex terminology. For example, 77 per cent said they didn’t understand the term “asset class”, while 73 per cent didn’t know what a “growth fund” was. Similarly, 70 per cent couldn’t define the term “gilts” and 62 per cent didn’t know what “risk appetite” meant.
But worryingly, the survey also found that many people don’t understand terms that are widely used in the media. For instance, 29 per cent of people admitted they didn’t understand the term “inflation” – and six per cent claimed they’d never heard of it.
Needless to say, this particular word has been hugely prominent on news bulletins for a long time now, and the Prime Minister has even made halving inflation one of his top five priorities that he wants voters to judge him on. That indicates there’s an assumption in some quarters that the general public knows what it means, but the survey findings suggest that’s not the case.
So is there a solution?
How can we make sure people understand key financial terms and can apply them to their own lives and their financial decisions? Well, if a lack of understanding is breeding fear, and in turn stopping them making worthwhile financial decisions, then giving people the information they want and need is surely the key. In fact, more than half of those polled said they would be happy to learn the basics of investing if they were given the right support. More than a quarter said simpler instructions would make investing less intimidating, while a similar proportion said having expert help would make a positive difference.
This is where a professional financial adviser can be so valuable, working with you to take a look at your finances and your goals, and suggest options for you. A specialist can also answer your questions, so you don’t need to feel intimidated or confused by complex terminology. Instead, you’ll feel empowered to make informed decisions, and confident that you’re taking the right steps to make the most of your money and assets.
If you want to find out more about investing and the options that are open to you, please get in touch and we’ll be happy to speak with you.
It is important to take professional advice before making any decision relating to your personal finances. Information within this article does not provide individual tailored investment advice and is for guidance only. We cannot assume legal liability for any errors or omissions it might contain. Ethical Futures llp is authorised and regulated by the Financial Conduct Authority.