Fear of losing money the biggest barrier to investing

May 4, 2023

Fear of losing money is the biggest barrier to people investing (67%), according to a survey by Bank of Ireland which also revealed low levels of investment knowledge.

Other respondents were afraid of having their money tied up for years (36%), while 34% felt they didn’t have enough money to invest.

Bernard Walsh, Head of Pensions and Investments at Bank of Ireland, said, “A lot of people perceive a very high level of risk with investment, in a lot of cases they might not realise they can be accidental investors maybe through their pension fund. They hear a lot of negativity out there and may not realise that over time, it is a better way of getting a return on their money.”

Mr Walsh said a lot of people think it is the preserve of the rich and famous; “it’s anything but”.

“We have people investing from as little as €100 per month. For a lot of people it’s about getting started and building it up over time.”

The survey found a lack of knowledge of the wide range of suitable investment products (31%) was another barrier to investing.

23% of respondents positively rated their know-how in the area of investments, while 49% rated their investment knowledge as poor.

Notably men claim to have more investment knowledge (33%) versus only 13% of women. 28% of men currently hold an investment account (just 10% of women), as the survey uncovered an overall lack of financial literacy in the investments space.

“I think the word ‘claim’ is the critical one there,” Mr Walsh said. “That might be over confidence on the part of some, but it feeds into a lot of the work that Bank of Ireland has been doing in relation to financial wellbeing is pointing to financial literacy not being where it needs to be in the country overall, and particularly in relation to investing. We need to do a lot of work on that.”

The survey found people are still more likely to consult a family member (38%) or a friend (24%) regarding investments, than they are to consult a professional financial adviser (22%), and 37% of those surveyed have never spoken to anyone at all about investing.

Investment apps are popular, and Mr Walsh said they have an important role to play. “I think their role is in terms of knowledge and information. Some people may use them to trade on an ongoing basis, but it does carry the risk of people trading too quickly on the back of short-term news instead of taking a long-term view.”

He encouraged people with money left over once daily expenses are factored in, and who already have a rainy-day fund in place, to consider investments. “Investments are a smart way to achieve growth on your money, and with patience and time can generate good returns.

“This is where good advice really plays its part in helping people make an informed choice, and why it is so important to talk with a qualified financial advisor. Investing is a long-term activity, but once people find the right balance between seeking the return they want and investing an amount they’re comfortable with, the result can often be well worth it.”

Bank of Ireland is running the ‘Invested Webinar Series,’ designed to help people learn more about investing. The first webinar begins today.

Article Source: Fear of losing money the biggest barrier to investing – RTE

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