Almost 50% of the UK Traders Feel Inflation Blues and Seek Cheaper Solutions

<p>The latest
UK inflation reading published yesterday (Wednesday) showed a fall in the
consumer price index (CPI) to its lowest level in more than a year. However,
this is no consolation for retail traders. </p><p>The newest
edition of the ‘UK Online Investing Report’ by <a href="https://www.financemagnates.com/tag/investment-trends/" target="_blank" rel="follow">Investment Trends</a> reveals
that nearly 44% of the UK's online investors are grappling with the impacts of
escalating inflation and the cost of living. The report sheds light on various
facets of the retail online investing scene in the UK, from long-term investors
to frequent traders.</p><p>The
State of Online Investing in the UK</p><p>The study
indicates that <a href="https://www.financemagnates.com/forex/the-uk-dominates-the-cfd-market-number-of-traders-up-by-more-than-90/" target="_blank" rel="follow">around 2.66 million UK adults</a> have unlisted funds or traded
listed investments online. Active listed <a href="https://www.financemagnates.com/terms/e/equities/">equities</a> investors have remained
fairly steady over the past year, with 1.23 million, which is a slight increase from
1.22 million in May 2022. This steady figure is largely due to the reactivation
of previously dormant clients.</p><p>According
to Lorenzo Vignati, the Associate Research Director at Investment Trends, the
adoption of cash products like fixed deposits and high-<a href="https://www.financemagnates.com/terms/y/yield/">yield</a> savings accounts
almost doubled in the past year. It reflects the global rise in interest rates.
</p><p>“Nearly one
in two online investors admit to feeling the brunt of higher inflation – with
many reporting a drop in portfolio value and savings,” Vignati added.</p><p>Additionally, the UK is witnessing a growing trend of dependence on artificial intelligence (AI) for financial guidance, as revealed by the most recent edition of the <a href="https://www.financemagnates.com/tag/the-uk/" target="_blank" rel="follow">annual Investor Index study</a>. The survey highlights that 73% of investors in the UK place their trust in ChatGPT, an AI chatbot, to offer dependable financial advice in the coming years.</p><p>The Impact of High Fees
and Changing Preferences</p><p>Tough
market conditions and high fees have contributed to the stagnation of dormant
online investors and have led to increased platform-switching activity. About
11% of online investors are likely to open a new account with a different
platform over the next year.</p><p>In terms of
investment holdings, it is estimated that 42% of total investments are held in
stocks and shares ISAs, which is up from 39%, and 15% in (Self-Invested Personal Pensions)
SIPPs and down from 18%. When it comes to confidence in investment decisions,
particularly for SIPPs, pre-retirees report the highest levels, while Zoomers
and Millennials exhibit the lowest levels of confidence.</p><p>“With a
notable disparity in confidence to make investment decisions from one
generation to the next, platforms have a key opportunity to review their
engagement and support services and ensure they are meeting the needs of their
investors across the entire user journey,” Vignati commented.</p><p>Low-Cost Platforms Gaining
Popularity</p><p>Investment
Trends' report also
uncovers a shift from traditional investing platforms to lower-cost
alternatives. As of May 2023, 61% of UK online investors are either using a
disruptive commission-free or low-cost investing platform. </p><p>Pure-listed
equities investors predominantly choose disruptive platforms, while low-cost
platforms are gaining traction among those pursuing a mixed equities and funds
strategy.</p><p>Investment
Trends, a research firm in the wealth management industry across the UK and
Australia, based this report on a survey of 13,386 online investors conducted
between April and May 2023. <a href="https://www.financemagnates.com/forex/uaes-fx-and-cfds-trader-population-reaches-record-49000-in-2023/" target="_blank" rel="follow">In another recent study</a>, the company reported that the United Arab Emirates' FX and CFDs traders population reached a record-breaking 49,000 in 2023.</p>

This article was written by Damian Chmiel at www.financemagnates.com.