Still Striving to Save

  • 18th April 2017

Will savers be putting more or less money aside this year and how are market conditions affecting people’s general attitude towards saving?

Survey explores people’s attitudes to saving and financial plans for the year ahead.

Few would argue that it’s a tough time to be a saver at the moment. The current low interest rate environment and general economic uncertainty are making it harder to get a high return on the money you invest.

We wanted to explore how these changing market conditions are influencing people’s investment decisions, for example how much money are they planning to save, where do they plan to deposit it and what will they ultimately be using it for.

We contacted panel members who kindly offered insight on their expectations for the year ahead. Given that this particular survey wasn’t specifically about West Brom products and services, we also opened up responses to non-Society customers in order to gain a broader perspective.

Here we will focus on what the panel shared with us, but if you’d like to look at the overall picture from all respondents please read the following report.

Saving regularly

The good news is that people don’t seem to be losing their appetite for saving, despite the market challenges outlined above. From the panel members we surveyed, 84% classed themselves as a regular saver, while 75% said they frequently spent time reviewing their financial position. 

Looking ahead, we found 63% of respondents expected to save about the same amount of money this year as they did in 2016. Around a third (32%) were going to save less, while just 13% said they were only interested in ‘living for today’ and therefore not saving at all.

For those planning to increase their savings balances this year, the most common reason was to help support children or grandchildren, followed by funding a big purchase such as a car or holiday and paying for home improvements.

Exploring different options

If rates from traditional savings accounts are getting lower, does this pave the way for alternative approaches that could potentially yield a better return?

We asked our panel members if they were more interested in exploring new avenues for generating savings income and 66% agreed. When presented with suggestions, the most popular alternatives to an everyday easy access account were:

  • Limited access savings (those which limit the number of withdrawals you can make)
  • Fixed rate bonds
  • Packaged current accounts that offer interest on some or all of your balance

But it was some of the more unconventional options that caught our eye. We were told by 37% of panel members that they would consider investing in the stock market, 31% were thinking about investing in property and 11% felt it might be worth investing in material goods such as classic cars or fine art. 

Also mentioned were peer to peer lending and buying Premium Bonds in the hope of winning a prize.

However, when asked about their willingness to take on a higher level of risk in pursuit of a better return, there was much less acceptance. Only one in three (31%) said they were comfortable with more risk; the majority declined it.

How this helps us

David Taylor is the West Brom’s Head of Products and he agrees that it’s still important to save on a regular basis.

“It is reassuring that the majority of panel members, particularly in these uncertain economic times, see themselves as regular savers,” he said.

“While interest rates have been falling across the market, it is still sensible to build up a financial buffer and try to fund the things you want through savings rather than taking on excessive amounts of debt.

“Diversifying your investments can help some people get more out of their money, albeit with careful consideration for any risks involved. 

“Having some more in-depth knowledge of what members are comfortable with helps us to refine our overall product offering. An example of this is independent financial advice, which we can facilitate through any of our branches for investors who want to look beyond traditional savings accounts and start planning for the future.”

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