deVere poll shows 7 out of 10 not planning to blow excess savings
deVere recently carried out a survey which showed that seven out of 10 people will not splurge any excess savings they accrued over the pandemic.
We asked clients located in in North America, the UK, Asia, Africa, the Middle East, East Asia, Australasia and Latin America: ‘Are you likely to spend the majority of the extra money you have managed to save over the last 12 months?’ 72% responded ‘no’. 16% said ‘yes’ and 12% ‘did not know.’
Of course, many households all over the globe have suffered incredible financial worry and uncertainty.
Yet in contrast, people in developed economies who have kept working from home, have accumulated more savings than they typically would have done, due to the lack of travelling, going out and undertaking leisure activities.
Indeed, according to Bank of England data, Britons have amassed approximately £100 billion in excess savings during lockdowns.
The household saving ratio surged to a record high of 29.1% in Q2 2020, a trend echoed in the majority of major economies across the globe.
In addition, the levels of excess savings are driving economic rebound forecasts and, in turn, inflation fears, as there are expectations that people will spend the additional money saved during the Covid crisis.
Nevertheless, our survey indicates that most people are not planning to spend a lot of the extra cash.
Of course, there will be a rise in spending as economies re-open, but the majority of those polled seem to welcome having an additional financial buffer.
The coronavirus pandemic has really got us thinking and valuing more than ever before what really matters. For most of us, this means making sure ourselves and our loved ones are financially secure to have the desired opportunities and lifestyles.
Naturally, whilst it’s positive to have accrued savings for the future, the extra money should be ‘put to work’ via a sensible investment strategy.
Out of all the years I’ve been a finance professional, I’ve only ever seen a small number of people who have acquired enough money for retirement by saving alone – and it’s typically because it was from an inheritance.
To my mind, having a properly diversified and regularly reviewed portfolio is essential for financial success in the long-term.
A sufficiently diversified portfolio needs to take into account different asset classes, sectors and geographical regions.
Following an initial spurt, households will unlikely aggressively spend their extra savings amassed over the pandemic.
Yet in order to boost the purchasing power of the additional money, of course many will be looking to top-up their investment portfolios.