Katherine Edge made her first investment at the end of last year when she began moving £44,000 from her cash savings into the stock market.
Edge, 47, from Great Ayton in North Yorkshire, had always saved, but only ever in cash, through Isas and in her bank account. She had a workplace pension from her job at her local council, but was put off by the ups and downs of the stock market. She said: “I liked knowing my money was safe and not exposed to risk. I was comfortable seeing the balance there.”
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That changed last August when she realised that the returns on cash were unlikely to get her to her goal of retiring at 57. Her parents, who held investments with Newcastle Building Society, encouraged Edge to visit a financial adviser in the building society’s branch in nearby Stokesley.
She said: “It kickstarted me looking into when I could take my pension and what I would need to do with my savings to get to my aim. I knew that if I was just leaving it in cash, I wouldn’t have that option to retire.”
Edge did not have an appetite for the highest level of risk, but knew she needed better returns on her savings. After three meetings with the financial adviser, in return for an ongoing annual fee of 0.7 per cent a year, she has transferred £44,000 worth of cash savings into a stocks and shares Isa since December. Her investments are held in a managed portfolio of different assets including equities, bonds and cash.
The Times’s Smarter with Money campaign is aiming to create a million more investors. Instead of leaving their money languishing in poorly paying accounts, savers could take advantage of the stock market, where returns are historically higher than cash over the long term.
Even with the occasional bumpy periods, such as the one we have been in since the outbreak of war in Iran last month, the market tends to bounce back overall.
The Barclays Equity Gilt Study, which has recorded the returns from different asset types since 1899, found that stocks grew an average of 1.8 per cent a year, adjusted for inflation, in the ten years to the end of 2024, and 2.9 per cent a year over 20 years. Cash savings, meanwhile, suffered real-terms losses of 2.9 per cent a year over a decade and 1.8 per cent a year over 20 years.
Over 50 years the difference was even starker — a 7.4 per cent annual return for equities and 0.9 per cent for cash, once inflation was taken into account.
Yet only about 20 per cent of UK adults invest in shares directly outside a pension, according to the Financial Conduct Authority, the City regulator.
Iain Lightfoot from Newcastle Building Society’s financial advice arm said the number of customers who started investing with the firm has risen about 90 per cent in the past two years.
Our campaign was boosted by new proposals from the FCA last week to make it easier for consumers to get cheap, simple financial advice on subjects such as pensions and investing from financial firms. Only 8.6 per cent of adults took regulated financial advice in the year to May 2024, the FCA said.
It suggested that financial firms could advise customers on whether investing would be appropriate through a more straightforward assessment, focusing on a few details such as what they want to use the money for and how long they want to invest.
Edge said she is in it for the long term and has tried her best not to look at how her investments have performed since she started, because she has plenty of time to ride out the inevitable ups and downs.
She said: “I know it’s fingers crossed because no one knows what will happen in the market, we’ve seen over the past three weeks what can happen, but hopefully over a ten-year period it’ll average out.”