- 17
- Jun
Around one in twenty people would sooner store cash in a mattress than entrust it to a high street bank or building society, according to MGM Advantage.
In its comprehensive Retirement Nation Study, the group found that consumer confidence in these sorts of savings vehicle is particularly low in north-eastern areas, where the Northern Rock crisis may have been most keenly felt. Meanwhile, Plymouth was found to have the lowest trust in banks and building societies. The tendency to stash cash away in the home is extant among both poor and rich households, the firm suggested. Nearly a fifth (18 per cent) of people struggling with personal loans and other forms of debt said they would rather store money under the mattress than entrust it to a financial institution. Similarly, one quarter of respondents with assets in excess of one million pounds said they would keep possession of their money.
However, for the majority of Britons, savings accounts are the most popular methods of investing, with 55 per cent of people saying they would choose this type of saving platform in an effort to secure their future financial security. Pensions funds came second with 17 per cent of respondents opting for this vehicle, while 12 per cent would rely on the UK property market. In uncertain global economic conditions, only six per cent of people said they would choose to invest in the stock market.
The report also identified a disparity between the sexes when it came to trusting financial institutions with money, with 60 per cent of women holding savings account, compared to 48 per cent of men. Older generations were also said to be fans of this type of investment method, with 59 per cent of over-65s stating that they owned an account. Overall though, people aged 16 to 24 were found to be most trusting: 66 per cent of people in this age bracket owned a savings account.
According to MGM Advantage, there is a degree of ignorance among some consumers as to the best ways to save money, with 19 per cent of respondents suggesting they did not fully understand such terms as individual savings accounts, equity release mortgages, defined-benefit/final salary schemes, stakeholder pensions, annuities, pension credits and independent financial advisory (IFA) services.
“Only one in ten of the population would invest in a mutual, but this may be more to do with ignorance than trust. Twice as many respondents who use an IFA, compared with those who don’t, would go to a mutual. But only three out of ten respondents understood the term ‘mutual’. This places ‘mutual’ at the lower end of the category of financial terms understood by around a third of the population, along with ‘pension credit’, ‘stakeholder pension’, ‘annuity’, ‘defined-benefit final salary scheme’ and ‘FSA’,” the report points out.
Earlier this year, a study by Saga suggested that many people had reservations about discussing their financial situation with their friends and family. Although 38 per cent of people are happy to talk about their pension arrangements, just 14 per cent of people will readily discuss the level of debt accrued on items such as credit cards and personal loans.
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