Savings v Investments

Eco_Miser

RG2015 said:

Many savers think investments are too risky, and many investors think having too much in cash risks losing out to inflation. 

My question is why do people with large amounts of excess cash (ie > 3 - 6 months emergency cash) choose to save and not to invest?

In my case it's because a) I think 3-6 months is way too short a time and b) I've got enough invested at risk, I want some assets that are guaranteed not to fall in nominal value.

For context, I'm retired and living on those investments.

AlanP_2

We have about 6 months worth of critical spend in cash and the rest in pensions which we will start to call upon from later this year.

At that point we will go 3-4 years likely / potential spend (in excess of DB income) in cash as why take any more risk than we need to? This will be about 10-20% of overall portfolio with the rest about 70/30 Equity / Fixed Interest.

I think the OPs question should be more naunced as there is a lot of difference between holding cash as the "safe" portion of a portfolio and just holding cash and no investments. 

MaxiRobriguez

There's plenty of research which shows people are impacted by/fear loss more than they are/do gains.

Most people are risk averse, prefer to do things the way they've always done rather than try something new etc...

Thrugelmir

MaxiRobriguez said:

Most people are risk averse, prefer to do things the way they've always done rather than try something new etc...

Nothing new about investing. Other than a new generation come along and believe that they know better. Experience can only be gained with time. There's no shortcuts.