FIVE million people over the age of 50 are expected to open a new ISA in 2017, research has found.
The older generation is still relatively risk averse, despite historically low interest rates, with almost half of respondents planning to open a tax-free account opting for a cash ISA. A third said they would consider a stocks and shares ISA, while one fifth said they would consider both.
Saga Investment Services, which commissioned the research, found that two thirds of over 50s already have a cash ISA and four in 10 have a stocks and shares ISA.
While the research did not look at Innovative Finance ISAs specifically, it does indicate the potential to attract new investors via the tax-free product, particularly as the over 50s are a key demographic within the peer-to-peer finance industry’s existing investor base.
“Savers have had it extremely tough over many years now and yet many still feel uncertain about making the switch to investing,” said Sally Merritt, head of product for Saga Investment Services.
“This is largely because people don’t know quite where to start and they are wary of the risk. However, people need to make their money work harder for them – not just to give them a higher level of income, but also simply to stop their money losing value in real terms.
“Ultimately, holding cash which earns less interest than the rate of inflation means that people are losing spending power. And the compounded effect of this over a number of months or years could be much bigger than they realise.
“If people have a good cushion of cash savings, say enough to cover 6-12 months’ worth of living expenses, then it may make sense to try investing with some of their additional cash savings.”