Why don't people invest?

bertpalmer

As someone said above - I think the problem is ignorance and fear.

Many of my friends consider it ‘gambling.’

Glen_Clark

Right now equities are close to record highs so the forums are full of threads like this saying how good investing is.
But some of us remember what a crash is like.

chucknorris

Fireflyaway wrote: »

I've had investments in the past that have lost money at the time needed to withdraw so maybe it also depends on what people are planning to do with the money and when they need it by.

If you need to withdraw money, it shouldn't be invested, investing is for the medium to long term, not the short term, you were speculating, not investing.

demonloop

Investing in the current climate is tricky and I would be very reluctant to offer the closest of friends any advice.

Up until the beginning of this year I had all my eggs in the managed funds basket, but I'm convinced there is a stock market correction on the horizon.

I sold the lot in February and invested it in BTL. The returns are similar, but tax is higher. Whilst the investments aren't as liquid as funds, I feel more comfortable with the BTLs right now.

demonloop

bertpalmer wrote: »

As someone said above - I think the problem is ignorance and fear.

Many of my friends consider it ‘gambling.’

Which it sort of is, unless you can predict the future.

Malthusian

demonloop wrote: »

I sold the lot in February and invested it in BTL. The returns are similar, but tax is higher. Whilst the investments aren't as liquid as funds, I feel more comfortable with the BTLs right now.

The last time there was a market correction there was a significant correction in the property market as well.

But of course you don't see the value of your BTLs plotted on a graph every day.

Of course there's a stock market correction on the horizon. There is always a stockmarket correction on the horizon.

Which it sort of is [gambling], unless you can predict the future.

Not correct. Gambling has a negative expectation of return. For every £1 you put on a roulette wheel you expect to get 97p back; if you keep placing bets then in the long run you will lose all your money. Investment has a positive expectation of return.

BananaRepublic

demonloop wrote: »

Investing in the current climate is tricky and I would be very reluctant to offer the closest of friends any advice.

Up until the beginning of this year I had all my eggs in the managed funds basket, but I'm convinced there is a stock market correction on the horizon.

I sold the lot in February and invested it in BTL. The returns are similar, but tax is higher. Whilst the investments aren't as liquid as funds, I feel more comfortable with the BTLs right now.

Studies have shown that you cannot predict the markets, and withdrawing money usually means you lose out on gains before the next crash. I recall that for many years prior to the last great crash, people were saying the markets were overvalued and about to crash. Had I listened to them, I would have missed out on some good returns. If you do not need the money for 5 or more years, then the best approach is simply to leave it invested in equities.

But if you feel more comfortable with BTL, then stick with BTL. On a related matter, I recall that the last crash in 2008 corresponded to a huge fall in property prices. I was trying to buy then, and there was a scarcity of decent homes on the market. That though might have been exceptional in that the crash was associated with a loss in confidence in the banking system, and banks were unwilling to lend, which would have contributed to house price falls.

trailingspouse

I can't say why 'people' don't invest, but I can tell you why I don't (not including pensions and suchlike).

It's complicated, it's time consuming, and if you get it wrong there's a lot at stake.

I think saying 'ignorance and fear', as if people only have to know more and be braver, is very simplistic. I know enough to know that it's not for me, at this point in my life. And I don't scare easy.

chockydavid1983

My feeling is that most people don't invest because they don't have or don't want to make (by cutting back) spare cash to put aside for the future.
It's a lot simpler than it appears at first and doesn't have to be time consuming, especially the more passive you go.
There is of course risk but if you're putting aside spare cash and you're in it for the long run, the bigger risks come from not investing but people don't see investment risk and inflation risk as part of the same scale.

ChesterDog

trailingspouse wrote: »

I can't say why 'people' don't invest, but I can tell you why I don't (not including pensions and suchlike).

It's complicated, it's time consuming, and if you get it wrong there's a lot at stake.

I think saying 'ignorance and fear', as if people only have to know more and be braver, is very simplistic. I know enough to know that it's not for me, at this point in my life. And I don't scare easy.

An old proverb about chess says "It is an ocean in which an elephant can drown, but a gnat may bathe".

I think investing is similar. It is infinitely complex but at the same time can be incredibly simple if that's preferable to you: a cheap, global, multi-asset fund, left for greater than five years, is the bathing gnat.