One Third of UK Adults Now Invest in Stocks as ISA Competition Intensifies
Fresh figures released on Thursday show a significant surge in retail investors entering the stock market, providing a boost to both City firms and Chancellor Rachel Reeves. The data indicates that one in three Britons, equating to 18.4 million people, now invest in the market, a notable increase from one in four back in 2020.
Post-Pandemic Investment Boom
The early stages of the post-pandemic period saw a rush of new investors, many of whom had time and savings during Covid lockdowns to try share investing for the first time. Initially driven by younger investors aged 25-34, the fastest growth over the past year has been among the 35-44 age group, with participation rising by 7%. The average age of a DIY investor has fallen from 55 five years ago to 49 today.
Holly Mackay, CEO of Boring Money, commented: "Investing is becoming more mainstream. British adults now manage over 13 million DIY investing accounts and have more choice than ever. Competition is hotting up. Pricing isn't the only element of value, but it's an important one and we expect pricing pressure to increase."
ISA Deadline Spurs Competitive Deals
With the tax year end and the ISA deadline of April 5 fast approaching, consumers are being urged to utilise their tax-free allowances. This has led to a glut of new deals as competition in the sector grows. Firms are aggressively chasing new clients, particularly those in their late 30s and early 40s, who typically experience the fastest wage growth and are planning for the future.
Key developments include:
- Barclays is offering £500 cashback on cash ISAs, though it requires a £100,000 investment to qualify.
- IG is providing up to £200 for opening a share account.
- Hargreaves Lansdown has reduced fees for both ISAs and self-invested personal pensions (SIPPs).
- HSBC, Zopa, and Lloyds Bank are offering cashback incentives for transferring or opening new ISA accounts.
- Tesco, Nationwide, and Trading 212 have either launched new products or increased interest rates on their cash ISAs, with rates reaching up to 4.6% for those who shop around.
Government Push for Stock Market Investment
Chancellor Rachel Reeves has emphasised the need to encourage more people to invest, as part of a broader strategy to enhance long-term financial well-being and support economic growth. In a speech last July, she stated: "For too long, we have presented investment in too negative a light, quick to warn people of the risks without giving proper weight to the benefits."
Reeves has enlisted ad-agency WPP to develop a "Tell Sid" style advertising campaign, aimed at boosting stock investing. Set to launch in April, this initiative will be led and funded by banks and investment platforms. The original "Tell Sid" campaign in 1986 encouraged small investors to buy shares in British Gas during its stock market debut.
Industry Perspectives and Future Reforms
Tom Selby, director of public policy at AJ Bell, noted: "Any upward trajectory for retail investing among Brits is hugely positive for the nation's long-term finances. It will also likely be music to the ears of Rachel Reeves as she looks to kickstart the government's campaign to boost retail investment and shift the current culture of saving in cash towards investments."
He added: "But there is still a huge amount that can be done to help more people embrace investing for their futures. Reforms should prioritise simplicity, particularly in the ISA market, with confusing jargon and large numbers of products acting as a barrier to many who might be looking to take that step from cash to investing for the first time."
Among new investors, Trading 212 now accounts for 42% of new accounts, making it the most popular platform, followed by Monzo and Aviva. Established players like Hargreaves Lansdown, AJ Bell, and Interactive Investor continue to compete in this evolving landscape.
