Voice of the Investor – Q4 2024
Investor confidence
As Labour came to power in the summer, Chancellor Rachel Reaves was vocal in highlighting the difficult economy they had inherited and the tough decisions and actions they would need take in the Autumn Budget. GDP growth had been fragile under the Conservatives and hasn’t yet improved under Labour. Against this low growth environment, the majority of UK adults (56%) and almost half of investors (45%) rate the state of the UK economy “bad.”
Over two in five UK adults (44%) consider themselves to be financially comfortable. This rises to 59% among investors and up to 79% among investors with at least £50k held in investments. Still, a third (34%) of investors say they are only “coping” financially, while a sizable minority (7%) say they are “struggling,” as the UK continues to face high inflation, increased interest rates, and the high cost of living.
Against this difficult economic background, investor confidence has been in continuous decline throughout 2024:
- In Q1 39% of investors expected their personal finances to get “better” in the next 12 months, by Q4 this had fallen to 29%
- In Q1 39% expected the performance of their investments to get “better” but by Q4 this had fallen to 26%
- In Q2 37% expected investment opportunities to get “better” in the next 12 months, by Q4 this had fallen to 29%
Investor Opportunities
Despite recognising less investment opportunities for the year ahead, UK investors remain committed to their own investments, with over half expecting to invest at the same level (56%) and over a quarter expecting to invest more (27%) in the next 12 months. High value investors with £100k+ in investments (31%) and investors with high incomes of £60k+ (36%) are more likely to expect to invest more.
Asked what common action they expect to take with their investments in the next 12 months, positively, “buying new shares” remains the top answer (26%) and has barely changed through the year. One marker of potential fragility in the market is that the proportion of investors expecting to “take out new accounts” in the next 12 months has fallen from 17% in Q2 to just 12% in Q4. One in five (17%) investors that hold a GIA expect to open a new account in the next 12 months, while only 10% of those with stocks & shares ISA expect to open a new account. High value investors (£100k+) expect to be more active, particularly in “diversifying their investments” (30%), “changing asset allocation” (32%) and “opening new accounts” (16%).
New Investments
FTSE 100 performance has plateaued since the summer,[1] with a +9.5%[2][3] total return in sterling for investments in the FTSE 100 over the course of the year 2024. This compares to higher returns in the US markets; Nasdaq 100 (+28%) or S&P 500 (+27%) throughout 2024. This may help explain why UK investors are expecting to see less investment opportunity in the next 12 months, and there is evidence that UK investors are increasingly looking to the US for investment opportunities in the next 12 months, with the US replacing the UK as the best buying opportunity among UK investors for the first time in Q4 2024. Cryptocurrencies could be another avenue UK investors are more open to pursuing in 2025. In Q4 there was a significant increase in UK investors citing Crypto as a best buying opportunity for the next 12 months, while incoming US president elect Trump has been advocating on behalf of Crypto and pledging to create a strategic national stockpile in Crypto currencies.[4] Younger investors aged 18-34 (31%) are more likely to consider Crypto a best buying opportunity.
Click here to access the full report:
[1] United Kingdom Stock Market Index (GB100) – Quote – Chart – Historical Data – News
[2] https://www.trustnet.com/news/13434341/five-charts-showing-what-investors-should-have-bought-in-2024
[3] ii investment performance review 2024
[4] What Trump promised the crypto industry ahead of the election
