Sunday, March 29, 2020

Misinformed Investors Are Hoping For Unrealistic Returns

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Over the past 30 years, the average returns of equities on international stock markets have averaged 7.2%, according to the MSCI Worldwide Index.

Although investors are hoping for double-digit returns, they are also concerned about the risk of falling markets.

In the UK, with Brexit approaching, almost half of investors (48%) prefer cash to investing and 60% agreed they were holding back because of risk and seeking safer investments.

A fifth are stashing their cash in a bank, 17% were looking at non-equity investments and another 17% were spending on luxuries rather than putting the money aside. A small number (4%) are keeping their cash at home.

“Investors’ expectations for returns of nearly 9% over the next five years look very optimistic,” said James Rainbow, co-head of Schroders UK Intermediary Business.

Investors have a thirst for knowledge

“The UK stock market has seen a remarkable rally in recent years, which has probably buoyed confidence. But much of the strong performance is due to the extreme actions taken by central banks to stimulate the economy. The broader picture is that we’re in an age of low rates and low growth. It’s therefore wise to expect lower returns.”

Most investors felt a better understanding of markets would let them make more informed decisions about where to put their money.

Although a third wanted to know more about specific topics and tax, in general, nine out of 10 wanted to improve their investment knowledge.

More about the Schroders Global Investor Study 2017

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