‘Why take the risk?’ Readers push back on Rachel Reeves’s savings shake-up

Rachel Reeves’s plan to encourage savers to move their cash into investments has sparked a lively reader response, especially among older people who say they have neither the time nor appetite for risk.

Many commenters questioned the wisdom of urging people into the stock market, arguing that fixed-rate savings accounts and tax-free ISAs already offer attractive returns of 4–5 per cent, with none of the potential losses.

“Why would I want to invest in something that could lose money?” asked one 78-year-old pensioner, summing up a widely shared sentiment.

Others pointed to personal experience with underperforming stocks and shares ISAs, and noted that at a later stage in life, there simply isn’t time to recover from a market downturn.

Still, a few acknowledged that younger savers with time and discipline could benefit from regular investing, provided they get the right guidance.

Here’s what you had to say:

Investment products are not for everyone, especially people who cannot afford top-end financial advice, which costs too. I once had an investment-only mortgage, which kept me awake for years, every time the markets underperformed. In the end, we cashed it when the markets were doing quite well and paid off the mortgage 8 years earlier. To be honest, it was not worth the anxiety and sleepless nights over 17 years. So, carefully consider what type of risk resilience you have and how you would cope if your investments underperform, or if you lose it all, or a considerable chunk of your money. For me personally, never ever again. I feel safer with my Cash ISAs and, for the moment, sleep a lot better!

Cecinha

Would you move your savings into investments for the chance of bigger returns, or are you sticking with the safety of cash? Let us know in the comments below.

Each to their own, but if I have a decent amount of cash to invest, then I always fix it with a non-UK high street bank that’s based in the UK and protects funds up to £85k, and do my homework on them first, also checking for decent UK-based customer service.

High street banks offer poor interest rate returns because they need to allegedly “cover their costs”, despite most banks now having closed down. But there are plenty of other banks out there that can give you a decent rate.

For me personally, if it’s a decent wedge of money, then I wouldn’t take the risk in investing in stocks and shares.

But that’s just me. If you’re rich and can afford to take the risk and the loss, then go for it.

Amy

I’ve a mate who’s far more well off than me, but she doesn’t have a scooby about all this stuff so she’s got £300k just sitting in her bank. It’s only in the last couple of years that she bothered getting an ISA and sorting out a higher-rate account, but when I said maybe she should invest or something, she simply wasn’t fussed. She said she doesn’t like the risk factor and is happy to just get a wee bit of interest and have it all to hand if she needs it.

If people really aren’t interested in investing, particularly due to risk, I don’t really see what you can do to persuade them. I feel like this is another duff idea from the increasingly hapless Reeves.

Elsie D

Assuming a 9 per cent return is pretty optimistic.

I was advised years ago never to make long-term plans based on more than a 5% return – that would double your money in just under 15 years and quadruple it in 33 years – and to treat anything higher as an unexpected bonus. That advice has served me well for over 40 years.

Yorkshireman

Remember the caveat: “Your capital is at risk and you may not get back the amount you invested.”

Remember the ads asking if you’d lost money in a stocks and shares ISA? I know people who lost or didn’t make anything on their portfolio. Don’t forget Labour will want to tax any gains.

samuel smith

Most people don’t understand their own risk tolerance and should not put money into any assets that they are not comfortable with seeing a 30–50 per cent drawdown on. That’s why Reeves, who is not a financial adviser, is giving bad advice.

PeakyBoo

The problem for Reeves is that there are far more attractive places to invest. For me, in the last 10 years, NASDAQ has been the only place to be. Some UK stocks have become attractive in recent years because of cheap valuations—cheap valuations because of a lack of confidence and the flight of deep pools of money from the UK, mainly due to Brexit and the mismanagement of baboons running the economy into the dust.

I hope Reeves succeeds – there is no alternative politically.

NotRedorBlue

After a year, my stocks and shares ISA has grown by the princely sum of 1.28%.

Stocks can dive very quickly and take ages to bounce back.

samuel smith

Rachel Reeves is relaxing regulations which were introduced after 2008 to prevent another financial crash. For that reason, I would be very cautious about investing.

STIDW

A lot of people, when they retire, use their lump sum to buy a car or a camper van. That is serious money just thrown away on a fast-depreciating asset. Just buy an old banger and invest the money in the stock market.

Pomerol95

I am 78 years old with an adequate pension and no mortgage.

My savings are about 50 per cent kept in fixed-term ISAs earning around 4–5 per cent tax-free.

I have an emergency fund in instant access. The remaining savings earn 4.55 per cent or more.

Why would I want to invest in something that could lose money?

Tony Cave

If you are in your “later years” you don’t have time to wait for falling stocks and shares to rise again. I have one stocks and shares ISA and, averaged out over 15 years, it’s not done any better than a cash ISA.

Heather

If you get yourself a reputable financial adviser (check their qualifications), they will do a risk assessment for you and agree on your risk profile before deciding where to invest.

We have a relatively modest amount invested with a single ‘platform’ and used to be medium risk, but as we are getting on now, we’ve gone medium/low—less time to recover from any nasty, unexpected events that cause sudden drops in value (e.g. Covid, Russia invading Ukraine).

WokeUp

And the key word is could. Investments could increase in value, but they could also decrease – unless the government is underwriting losses.

rEUjoin

Does this mean that major investment in the British economy is so low that the government is resorting to exhorting the people of this country to fill the void – hmmm.

Claudia

If they haven’t put the money into a better savings account, then I’d doubt they’d make the leap. It would be convenient if the interest rate had to be at least adequate—that was the law.

TheRedSquirrel

Twenty years is a long time in investment. During this period, companies can go bankrupt, geopolitical turmoil and wars can affect investments, and services and products can become obsolete due to disruptive technologies, and so on.

Opinator

Some of the comments have been edited for this article for brevity and clarity.

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Source: UK Politics - www.independent.co.uk