With the Chancellor looking to launch a Starter ISA to get Britain investing, new figures from Be Clever With Your Cash reveal what’s currently holding people back from putting money in the markets.
More than half (54%) of Gen Z adults say the main thing stopping them from investing, or investing more, is worry about risk, not knowing where to start, not having time to research, or not trusting providers – all perceived barriers that can be tackled with a bit of knowledge and education.
Just 28% say it’s because they don’t have enough spare money, according to new research from consumer finance website Be Clever With Your Cash.
It’s a similar story across the UK. Almost half (45%) of all adults point to one of these perceived barriers, compared with 32% who say money is the problem. These are hurdles of knowledge and confidence rather than hard limits, and many people can get past them with better information, a bit of research and the right tools.
The findings come as Chancellor John Healey recently canned plans to cut the Cash ISA allowance and announced a new Starter ISA for first-time investors, signalling a shift towards encouraging people to invest rather than restricting tax-free cash savings.
But savers with cash outside an ISA face a bigger tax bill. From April 2027, tax on savings interest above the Personal Savings Allowance will rise to 24% for basic-rate taxpayers, 44% for higher-rate and 49% for additional-rate taxpayers. That is four percentage points higher than currently.
Age also plays a part. Gen Z are four times as likely as Baby Boomers to say they don’t know where to start or how to choose (21% vs 5%). They’re also the generation most likely to say they don’t trust investment providers (7%). Millennials are the most likely to say they’re too busy to research funds or shares (10%).
Older adults are held back by caution rather than confusion. Worry about risk is the biggest perceived barrier overall (23%), rising to 29% of Boomers compared with 18% of Gen Z.
Even people who already invest feel unsure at times. One in ten investors (10%) say not knowing where to start or how to choose is what stops them investing more.
Gen X stand out as the squeezed generation. They’re the only generation for whom a lack of spare money (44%) is a bigger barrier than the perceived ones (39%), and they’re the least likely to invest in the stock market (33%).
And while younger people feel the most lost, they’re actually more likely to invest than older generations. Four in ten Gen Z (41%) and almost half of Millennials (48%) hold stock market investments, compared with a third of Gen X (33%) and Boomers (34%). Overall, 39% of UK adults invest in the stock market.
Younger savers are also more likely to mix investing with cash in their ISAs. Nearly as many Gen Z hold a Stocks and Shares ISA (20%) as a Cash ISA (22%). Boomers, by contrast, are two and a half times as likely to hold a Cash ISA as a Stocks and Shares ISA (50% vs 20%).
Amelia Murray, Money Expert at Be Clever With Your Cash, said:
“Investing isn’t right for everyone right now, and if money is tight, building a cash safety net comes first. But it’s striking that so many people are held back by worry and confusion rather than lack of money. Those are barriers we can do something about.
“Risk is real, and you should only ever invest money you can leave alone for the long term. But there’s a myth that investing is complicated, time-consuming or only for experts, and it’s simply not true. Would-be investors often just need a starting point, and the basics are much simpler than the jargon makes them sound.The key is to choose a regulated provider, spread money across a variety of investments and give it time, so your money has the best chance to ride the ups and downs of the stock market.
“With the Cash ISA cut off the table, the focus rightly moves to helping people understand investing, and that’s exactly what our research shows is needed. And with tax on savings interest rising to as much as 49% from April 2027, it’s more important than ever to make the most of your ISA allowance. That means cash for your safety net, and a Stocks and Shares ISA for money you can leave invested for five years or more. Whatever your age, the key is to understand the risks, think long term, and make sure you’re not paying more in fees than you need to.”
Five ways to get past the barriers before you invest your first £1
- Build a cash buffer first. Aim to have emergency savings in an easy-access account before investing and have cleared expensive debts, like credit cards. Once you do, you can start investing with small amounts.
- Worried about risk? Think long term. Investing generally suits money you won’t need for at least five years, because markets can fall as well as rise in the short term. Work out how much risk you’re comfortable with.
- Don’t know where to start? Pick the right account. From April 2027, interest on savings held outside an ISA will be taxed at higher rates, so it pays to use your tax-free ISA allowance first. A Stocks and Shares ISA shelters your returns from tax, a general investment account has no limits but is taxable, and a self-invested personal pension (SIPP) adds tax relief but locks your money away until later life. Our guide to how to invest walks you through the basics.
- Short on time? Ready-made funds, investing platforms and robo-investing services can pick a mix of investments for you, based on how much risk you’re happy to take.
- Not sure who to trust? Check and compare. Only use providers authorised by the Financial Conduct Authority (FCA), check whether FSCS protection applies, and compare fees side by side. Remember that the cheapest isn’t always the best.
