UK retail investors favour trading and investing in stocks and shares online over low-interest savings accounts, and they prefer to do it themselves rather than use an IFA

According to the findings of a new survey, people in the UK are choosing to trade and invest in stocks and shares online rather than receive potential returns from savings accounts with all-time low-interest rates.

The poll of 2,000 people across the UK, commissioned by Capital.com and conducted by OnePoll, also reveals that people in the UK are choosing to trade online themselves because they cannot afford to use an IFA and believe that banks charge too much to manage investments.

Four in ten respondents (38%) are trading or investing in stocks and shares online at home or have done so in the past, and a fifth (21%) are considering it, according to the survey.

More than half (52%) of those respondents say that they decided to do this because the potential returns are better than savings rates offered by banks. A further 44% believe that online trading is a convenient way to make some extra income.

The main reasons given for choosing to do the trading online are that it is cheaper to do it themselves than to go through a traditional bank (37%) and they cannot afford an IFA (35%).

Respondents’ reasons for choosing to trade stocks and shares online include planning for the longer term and saving for retirement or their future (41%) and trying to make up for lost earnings due to covid-19 (24%). Also, some have chosen to do this because global stocks are experiencing a bull run and they do not want to miss out (21%) and others took the plunge because they saw the headlines about GameStop armchair investors (20%).

Asked to choose how they would invest £1,000, trading in stocks and shares featured in the top three choices for 26% of respondents, just behind ISAs (29%) and savings accounts (36%).

Jonathan Squires, CEO of Capital.com, said: “This independent national survey reveals people's genuine concern about their financial futures. But even as savings rates remain low and questions persist about how they can make their money grow, it is important that people understand the different risks associated with online trading versus a savings account. Savings shouldn’t replace trading and people should only trade what they can afford to lose and even then, they should invest with the long-term in mind.

“The survey also raises the important question about whether traditional sources of financial management are offering value for money. There is a clear willingness for people to take matters into their own hands by trading and investing in stocks and shares directly online, themselves. The internet has broken down barriers to education and investing, making it easier for people to find information online.”

The survey also reveals a stark age divide in online trading experience levels. Respondents from the Gen Z cohort (18-24) indicated that they feel they are the most experienced when it comes to trading, with 32% describing their investing or trading experience as professional, followed closely by 20% of millennials (25-40).

But only 7% of Gen X aged people (41-56) and just 2% of baby boomers (57-75) think that they have a professional level of trading experience. The oldest respondents aged 76 plus state they have novice-level or zero trading experience (72%), followed by 65% of baby boomers, 56% of Gen X, 43% of millennials and 29% of Gen Z.

Mr Squires added: “Long gone are the days when trading was the sole preserve of pinstriped suites in the square mile – technology is allowing ever more people the chance to trade. As a mobile-first generation, millennials and Gen Z are likely to hone their skills using trading tools and resources that are easily accessible via apps and websites. Education remains key to ensuring safe and responsible trading, especially if you are young and just starting out.”

The survey also reveals a gender divide, with 47% of male respondents either currently trading in stock or shares or having done so in the past, compared with 29% of women. However, the same number (21% of men and 20% of women) are considering doing so in the future.

Among those who said that they would not trade stocks and shares online, 48% said that they did not know enough about online trading to do it themselves while 20% said they were afraid of being charged a lot of fees to trade online. Only 7% said they wouldn't trade online themselves because they only trust IFAs or banks to do so and 59% said they don’t trade online themselves because they consider it too risky.