Investments and the cost of living: why everyday investors are being forced to cash in

5 min read|Published November 16, 2023
INT_Blog investment platform cover photo

As retail investors use their investments to boost income more frequently, Tink’s new research reveals that ‘set and forget’ investing has become a thing of the past. With many investors liquidating assets to manage the cost of living, here’s why instantaneously moving money in and out of investment accounts is becoming key for consumers.

TL;DR – Quick summary
  • Everyday investors are being forced to liquidate assets in current circumstances, putting pressure on the need for instantaneous investment transactions.

  • Tink’s new research indicates that nearly two-thirds of survey participants worry about their investments in the current economic climate.

  • 74% of those surveyed want instant transfers from bank accounts to investment accounts, and 18% would consider switching platforms for this function.

TL;DR – Quick summary
  • Everyday investors are being forced to liquidate assets in current circumstances, putting pressure on the need for instantaneous investment transactions.

  • Tink’s new research indicates that nearly two-thirds of survey participants worry about their investments in the current economic climate.

  • 74% of those surveyed want instant transfers from bank accounts to investment accounts, and 18% would consider switching platforms for this function.

Our new research uncovers that investment pots have proven to be a financial ‘safety net’ for everyday investors during challenging economic times. Suggesting a shift in investing behaviours from long-term ‘set and forget’ portfolios, consumers now appear to need instant cash in order to mitigate rising living costs. 

Surveying active retail investors in the UK who use DIY investment platforms, 50% of respondents said investing during the pandemic helped to supplement their income – and in more recent times, 51% have cashed in some of their investments to help with the cost of living. What’s more, an estimated 42% of retail investors who owned a home have also dipped into investment pots to reduce mortgage borrowing due to rising interest rates.

For many, investing isn't even an affordable option today. Nearly a fifth (19%) surveyed plan to divest their investments in the next six months because they need the cash. Two-thirds (66%) surveyed worry about their investments against the current economic climate.

INT_Blog Investment platforms inline image 1

The role of investments in day-to-day financial management

While it's clear investment pots are now being used as financial accounts by retail investors, the research also suggests an increasing daily reliance on consumer-facing investment platforms. The survey found the majority (61%) of respondents said that investments play a key role in their day-to-day financial management, with a massive 70% viewing them as a way to future-proof their finances. 

However, concerns remain around current DIY investing processes. For example, an estimated two-thirds (66%) worry about losing money on an investment platform because it has taken too long to top up their account – and 70% cite being locked out of investments as a top concern.

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UX needs increase demand for better investing apps

Tink’s findings reveal demand from armchair investors for more seamless, speedy processes when it comes to moving money in and out of their investment account.

For example, when using investment apps, three-quarters (74%) of those surveyed would like to be able to instantly transfer money from bank accounts to investment accounts, without having to leave the platform app or website. 18% would consider switching platforms if this function was available elsewhere.

INT_Blog Investment platforms inline image 3

Retail investors go as far as to say that they would part with more cash for improved user experiences. An estimated one in five retail investors would invest more if an investment platform had an easier, or more instant, onboarding process. A similar number (18%) would be encouraged to invest more if an investment platform allowed them to make instant payments to their investment account.

“During the cost-of-living crisis, armchair investors are leaning on their investment pots as a way to support their day-to-day finances. But with people today having less available money to invest with, investment apps are competing for a shrinking share of wallet,” says Tom Pope, SVP of Payments & Platforms at Tink. 

“Against this backdrop, investment apps can’t afford to deliver poor user experiences or friction-filled processes. Investors want to be able to transfer money seamlessly between their bank accounts and investment accounts without needing to leave the app/website. By leveraging open banking payments, investment platforms can transform user experiences and support customers as they look to their investments to help them through this period.”

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About the research
This research was conducted by Censuswide on behalf of Tink in July 2023, of 505 national representative active individual investors in the UK – those who personally manage their own investment portfolio in apps and on investment platforms. Interested in learning more about how open banking toolscan help you get ahead? Reach out to our team with this form.

Case studies, comparisons, statistics, research and recommendations are provided "AS IS" and intended for informational purposes only and should not be relied upon for operational, marketing, legal, technical, tax, financial or other advice. Visa Inc. neither makes any warranty or representation as to the completeness or accuracy of the information within this document, nor assumes any liability or responsibility that may result from reliance on such information. The Information contained herein is not intended as investment or legal advice, and readers are encouraged to seek the advice of a competent professional where such advice is required.

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