Presented by J.P. Morgan Asset Management
With simple, low-cost ways to invest now available to everyone, you can protect your money from inflation while also driving positive change at the world’s biggest companies.
You don’t need to read the financial pages to understand the meteoric rise of the technology giants that dominate today’s markets. The fact that you turn to Uber for a taxi, Netflix for a film and Amazon for pretty much anything else tells you everything you need to know. Yet many would-be investors believe the growth of these companies – and thousands of others operating across all sectors of the global economy – isn't something they can benefit from.
In 2021 J.P. Morgan Asset Management conducted a survey of more than 6,000 people and it painted a clear picture of apprehension about investment among those without experience. Our survey showed 57% of male non-investors believe investing is complicated, rising to 64% of women. What’s more, almost half of non-investors (46% of men and 47% of women) said investing is only for those with a lot of money.
For those who are put off investing by worries about complexity or barriers to entry, the default option is to leave money in bank accounts. While our survey revealed nervousness around investing, it showed a range of positive associations with bank accounts:
Source: J.P. Morgan Asset Management Saver to Investor Survey, January 2021.
Why invest instead of save?
Investing is inherently more risky than saving, but this extra safety comes with some downsides. For one thing, interest rates offered by bank accounts are typically well below 1%. With UK inflation currently running at more than 5%, this means the real value of your savings will shrink with every passing month.
As well as reducing your financial clout, putting all your savings into bank accounts also means you lose the opportunity to have your say on how companies should treat their workers and the planet. Publicly listed companies are accountable to their shareholders, and as a part-owner of a company you gain a voice as well as an asset.
The survey highlighted that sustainability is rising up the agenda among investors, who are increasingly recognising that they have the power to drive positive change. Almost half of this group said they will only invest in sustainable companies in future:
Source: J.P. Morgan Asset Management Saver to Investor Survey, January 2021.
Where to start your investing journey
If the chance to have a positive influence on the decisions made by the world’s biggest companies while also protecting your money from inflation appeals, but you’re new to investing, how can you get started? And how much money do you actually need?
The good news is that online investment platforms have put global markets within reach for ordinary savers. With low fees and a low minimum investments, anyone can become an investor. The J.P. Morgan Asset Management survey showed that there are already high levels of investment through online platforms, with many people looking to get involved in the near future:
DIY investing is on the rise
Source: J.P. Morgan Asset Management Saver to Investor Survey, January 2021.
Once you’ve set up an account, you’ll have the option to buy a vast array of shares, funds and other assets. While you may have specific investments already in mind, for many new investors low-cost pooled funds and exchange-traded funds (ETFs) are a good option.
These combine the assets of thousands of individual and institutional investors to buy a wide range of shares or other investments. By spreading your money across many investments, you effectively smooth out the ups and downs of individual stocks, while still benefiting from any appreciation in the market over time.
Because the managers of pooled funds and ETFs represent thousands of investors, they have significant sway at corporate level, helping to hold companies to account on the issues that matter to their investors. If the climate crisis or social inequality is a priority for you as an investor – either because you are passionate about the issues or because you think only companies that respond to these challenges have a future – there are many funds with an explicit environmental, social and governance (ESG) mandate.
Taking that first step could open a world of opportunities, giving you confidence to put your money to work for you and the planet.
With investment, your capital is at risk.
This article should not be read as personal financial advice. Individual investors should make their own decisions or seek independent advice.
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