Investors sceptical that inflation will lower this year
Nearly three quarters of investors are not confident that inflation will be brought under control this year, which is impacting their investment strategy.
A survey of retail investors by trading platform HYCM revealed how the current economic climate is impacting their investment plans for the next 12 months.
Two in five (40 per cent) said they were too nervous to make new investments in the current climate, while 42 per cent plan to adopt a conservative investment strategy in 2023. This figure rose to 55 per cent in the 18-34 demographic.
Meanwhile, 22 per cent said they will be forced to liquidate their investments if the cost-of-living continues to climb. This figure rose to 43 per cent among those 18-34.
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The trading broker commissioned an independent survey of 777 UK-based investors, all of whom have investments worth more than £20,000, excluding the value of their residential property.
One third (33 per cent) plan to target their investments specifically to sectors they think will be resistant to the recession, with this figure rising to 52 per cent among the youngest investors surveyed.
Currently, just under half (49 per cent) of the respondents surveyed have investments in stocks and shares, property (31 per cent), and fixed interest securities (29 per cent).
When surveyed about their plans for 2023, the majority (67 per cent) are planning to hold their position on fixed interest securities.
The survey found that 63 per cent of those with investments in stocks and shares and 56 per cent of those who have invested in gold are also looking to maintain their position. Just 23 per cent plan to add more stocks to their portfolio.
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“Although inflation has somewhat eased over recent weeks, with the most recent CPI figures still standing above 10 per cent, HYCM’s research indicates that UK investors are fearful that the spectre of inflation could stick around in the long-term,” said HYCM chief market analyst Giles Coghlan.
“Inflation is a beast that eats away at hard-earned savings and plays havoc with domestic budgets – the idea that it could become entrenched is something the Bank of England wants to fight.
“But after a difficult couple of years, even with further interest rate hikes in the pipeline, many investors remain concerned about an imminent recession. Naturally, this is translating into cautious investment practices – however it is encouraging to see that a good portion of investors are looking to fight the fall by buying the dip.”
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