The UK trails the G7 in equity ownership: Why do we hate investing?

Despite the consistent outperformance of many global markets throughout history, Britons are more wary of stocks and shares than any of their G7 counterparts. Why do we hate investing so much? 

According to an Abrdn report, just 8% of UK adults hold equities and mutual funds outside of a pension, the lowest rate in the entire G7. 

This figure can appear particularly stark when compared to the 33% of US investors who choose to hold their wealth in investments. So why are we so different? 

One answer can be found in the UK’s eagerness to embrace buy-to-let property as a core part of our investment strategies, as opposed to putting money into stocks or building a portfolio focused on equities. 

While US adults hold around 26% of their wealth in property, UK savers are allocating around 50% of their investments towards housing. 

However, we’re also a nation that’s largely averse to investing. According to recent figures from HSBC, only 38% of UK adults invested some of their cash, meaning that the vast majority of us are either unwilling or unable to invest. 

Why does the UK hate investing in stocks? 

Even though the United Kingdom has a strong housing market and a history of consistent growth, the S&P 500 index rallied 23% in 2024 alone. 

One of the leading reasons why we’re so uninterested in investing in stocks and shares is cultural. While United States investors have a risk-taking culture, their UK counterparts appear to be uneasy with the prospect of buying into something as intangible as the stock market. 

Particularly in the wake of the 2008 financial crisis, Britons have more readily associated stocks and shares with gambling and believe that their investments could easily lose value as well as grow. 

The United Kingdom also has a weaker stock market, with the FTSE 100 index rising just 180% over the past 30 years, as opposed to the 1,100% growth experienced over the same period. While nothing is stopping UK investors from buying into S&P 500 stocks, the US index and its weaker visibility overseas could make it seem like a less tangible investment strategy. 

The importance of diversification

The UK’s love of the property market is unlikely to be going anywhere quickly, but investors can still benefit from diversifying their holdings to ensure that their exposure is spread across different asset classes. 

This can not only help to keep your wealth well-protected if the UK property market experiences slower growth, but it can also compound your earnings during boom periods. 

Choosing to buy into stocks and shares can even help to get you further up the property ladder, particularly if you open an investment account that’s geared towards building a nest egg for a one-off purchase. 

But how can you embrace stocks and shares and take your first steps on your investment journey? There are many investing strategies that you can look to:

Open a stocks and shares ISA

66% of British adults are nervous about investing, and while the UK remains ambivalent about investing in general, the number of adults using an ISA (individual savings account) is growing. 

With 3.8 million Stocks and Shares ISAs and 7.9 million Cash ISAs subscribed to in the 2022 to 2023 financial year, many Britons are choosing the tax-efficiency of savings accounts as a key way to grow their wealth. 

What’s more, is that available data seems to show that ISAs work for investors. According to HMRC figures, nearly 5,000 ISA holders have now reached millionaire status despite the accounts having a £20,000 cap on annual tax-free allowances. 

The ISA millionaire count has climbed from 4,070 in 2023 to 4,850 in 2024, with the best performers among Stocks and Shares ISAs. 

The fact that more UK residents choose Cash ISAs ahead of the higher earnings potential of Stocks and Shares ISAs is telling of the level of risk-aversion that investors have. 

The beauty of ISAs is that they can cater to your financial needs and Flexible Stocks and Shares ISAs allow you to temporarily withdraw funds and replace them without impacting your tax-free allowance. This can help you to save at a rate that’s more comfortable for you. 

Round-up apps for passive saving

You could also build your exposure to stocks and shares with round-up apps that automatically save and invest your money on your behalf. 

These apps can either round up your card purchases to the nearest pound before investing them in an ISA on your behalf, or you could set up automatic monthly payments after payday to passively build your stock market portfolio.  

With estimations for your long-term investment returns and a series of smart saving features to help you invest at your preferred level of risk, round-up apps are a great way to add some diversification to your savings and build your wealth. 

It’s also easy to modify your deposits if you’re having an expensive month or struggling to keep up with payments elsewhere. 

Embracing equity ownership

We may be a nation of real estate lovers, but adding exposure to stocks and shares can really help to level up your portfolios and pave the way to reach your long-term financial goals. 

While this can be a daunting prospect, there are many platforms and investment strategies out there that can help to build your exposure to the stock market in a way that suits your needs and risk appetite. With this in mind, there’s no better time to embrace diversification and grow a more sustainable portfolio long into the future.

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