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69% will ditch cash for higher risk investments

69% will ditch cash for higher risk investments

10 August 2010 / by Rachel Mason

-69% won't consider investing in cash while base rate remains at 0.5%

-55% of those would go for structured products

69% of savers have had enough of poor savings rates saying they will invest in riskier assets going forward.

The latest research by Fair Investment Company has revealed that more than two thirds of investors are prepared to take more risk while rates remain so low in the hope of better returns on their cash.
"With the base rate still stuck at 0.5%, savings rates are very poor," says Nick Scarrett, head of pensions and investments at Fair Investment Company.

"The average savings rate is currently just 1.63% while the average cash ISA rate is 2.07%. Even the top rates aren't paying much over 4% when you fix for 5 years, so it is not really surprising that savers have had enough of earning such little interest on their cash," he said.

When asked what type of investment product they were most likely to opt for, only 31% of respondents said cash. The remaining 69% said they would look at riskier assets, with more than half (55%) of those respondents choosing structured products. Other options respondents said they would choose included equity funds (14%) and corporate bond funds (16%).


"The majority of those not looking to invest in cash are looking at structures, which in the current financial climate is understandable," says Nick.

"This is because structured products offer a way of moving into riskier assets while keeping a level of capital protection; this makes them popular with investors looking for higher returns than on cash savings but not willing to take the risks involved with stock-market investing."

"And with the financial climate as it is, and rates more likely to fall further than increase, a diversified investment portfolio including some structured products is certainly worth considering.

"But remember, if you are considering structures - or any other investment product - you need to make sure you understand the product and the risks involved before making a decision."