Nearly two-thirds of investors are playing safe with their investments by preferring low-risk options, according to new research.
Only a third are willing to take risks with their savings and investments – and just a third of them are ready to gamble on high-risk/high reward strategies.
The research, by financial firm Zurich, spoke to investors about their attitude towards risk and making money to come up with the results.
One of the main points coming out of the report was that attitudes to risk change depending on an investor’s life circumstances.
The four different investor types
The research clearly identified four types of investor –
- High risk takers (10%)
- Investors willing to consider higher risks (26%)
- Low-risk investors (58%)
- Investors who accept little or no risk (6%)
Life events also affect how much investors are willing to gamble, with triggers like marriage and having children reducing their taste for adventurous investments.
Unsurprisingly, investors without young families were often those prepared to accept the highest risks.
But those with children and those who had been divorced and possibly taken on a second family were found to more risk averse.
Life events and risk attitudes
Over 55s approaching retirement also had less willingness to gamble their savings, preferring to safeguard the money they had stockpiled before they gave up work.
The report also disclosed that investors who had taken professional advice were happier about accepting losses because they had a better understanding of how investment worked that those who managed their own finances.
David White, of Zurich, said: “The research underlines the complex nature of investment and how life changes affect people’s attitudes towards protecting or gambling their money.
“Understanding risk and realising not every investment will make a profit is part of the equation and it’s interesting that investors with financial advisers have a better understanding of making sure their portfolios are tuned to reflect life changes, increasing their ability to achieve financial goals such as a comfortable retirement.
“Consumers need to understand the nature of the investments they are making so they can make the right choices about risk and their capacity for covering a financial loss.
The survey was put together from speaking to more than 1,000 investors with £10,000 or more to invest, a focus group of investors with more than £50,000 to invest and conversations with more than 250 financial advisers.
