The latest findings from the Standard Life Savings & Investment Index (“the Index”) show that interest rate rises have had a significant impact on people’s belief in property as an investment category.
Confidence in people’s own homes as a savings vehicle for their financial future has fallen by just over 19% since October 2006 while confidence in buy to let has decreased by almost 27%. Following a steady increase in popularity in both property categories during 2006, the Index scores for people’s principal residence and buy to let are now close to the levels seen in January 2006. This reflects the increase in interest rates in November 2006 and more recently in January 2007, just a few days before the latest Standard Life survey fieldwork took place. In addition, the popularity of premium bonds has fallen by around 29%.
This has led to the overall Index score decreasing for the first time since research began in July 2005, moving from the highest score of 23 in October 2006 to a score of 21 today.
The overall Index score could have fallen further but has been buoyed by a significant increase in confidence in Notice Accounts and basic cash savings as a way for people to invest for their financial futures. As would be expected at this time of the year the popularity of ISAs as savings vehicles has increased by almost 10%.
Commenting on the findings, Trevor Matthews, Chief Executive of Standard Life Assurance Limited, said, “Until January 2007 the Standard Life Savings & Investment Index has shown that property is the most popular investment category in the UK. With interest rate rises having such an immediate impact on investor confidence, I hope that investors will now consider spreading their investments across a wider range of investment categories and vehicles when planning for their financial futures.”
Trevor continued, “It is worrying that only 31% of those questioned are satisfied with the overall level of their savings for retirement and our research shows that it is still the case that not enough people are saving for retirement. As an industry we need to encourage people to plan adequately for their old age.”
After the last wave of the Index witnessed retirement leapfrogging holidays as the main thing people are saving for, holidays have jumped back into first place in January 2007 with 51% of those questioned saving for holidays, up from 46% in October 2006. Home improvements and buying a car are in third and fourth place, after saving for retirement, with Christmas moving down significantly from 4th to 7th place.
One in ten expect to save less in the year ahead, while an encouraging 38% of people in the UK hope to save more. When respondents were asked if they had dipped into existing savings over the last three months, 29% stated they never dipped into savings, the highest score so far. Those dipping into savings to pay for holidays was significantly down from 31% in October 2006 to 23% in January 2007, the lowest score to date.
Ends
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Yvonne Savage, PR Manager
Standard Life Assurance Limited
Direct: 0131 245 0476
Mobile: 0771 248 6331
Email: yvonne_savage@standardlife.com
1. The Standard Life Savings and Investment Index is a quarterly survey measuring consumer sentiment for investment classes and savings vehicles.
2. The research was carried out by Canvasse Opinion from Experian using a quantitative online methodology. The most recent wave of fieldwork took place between 15th and 22nd January 2007 with an overall sample size of 1523. Based on all responses, this sample size allows us to comment on significant differences where there is a +/- 3% variance wave on wave. Interpretation and analysis of results were carried out by the Customer Research Department at Standard Life.
3. Respondents are asked “On a scale of 1 to 5, where 1 = very bad and 5 = very good, please consider the following list of investment categories and tell me whether you feel it is a good or bad time to invest in this way for your financial future:
The Index scores are calculated by removing those who state ‘don’t know’ then taking the remaining respondents’ base scores (including those stating ‘OK’), adding the good/very good figures and minusing those stating bad/very bad.
4. Copies of the full report are available in PDF format on request.
5. Standard Life has approximately 7 million customers worldwide and provides an extensive range of products and services, aimed at meeting the financial requirements of customers throughout their lives.