Pulse Check

Why investors aren't letting uncertainty hold them back

In his latest Pulse Check column, Manuel Pardavila-Gonzalez shares his perspective on what’s influencing how people save and invest, and the lessons we can take from evolving investor behaviour.

It's been hard to avoid the headlines this year. Whether it's rising household bills, political uncertainty, market volatility or conflict around the world, there have been plenty of reasons for investors to feel cautious.

That's why one finding from our latest investor research really stood out to me. Rather than stepping back, many investors have continued to put money into their investments and focus on their long-term goals.

In fact, the average amount invested rose from £2,413 in the first quarter of the year to £3,554 between April and June, an increase of almost 50%. At a time when many people are feeling pressure on their finances, that's a remarkable show of commitment to future goals.

I think there's an important lesson in that.

None of us can control what's happening in global markets or predict the next big news story. What we can control is how we save, invest and plan for the future. That's exactly what many investors seem to be doing.

Investment confidence remains resilient amid cost-of-living pressures

That doesn't mean people aren't worried. Far from it. Our research shows that the cost of living remains the biggest influence on investment decisions, affecting 81% of investors. Concerns about inflation, political uncertainty and geopolitical conflict have all risen since the start of the year.

Yet despite those concerns, many investors are proving remarkably resilient.

Around 25% made little or no changes to their portfolios during the second quarter, while others made measured adjustments, such as increasing exposure to individual shares, moving some investments into cash or exploring new investment opportunities. What we aren't seeing is widespread panic or knee-jerk reactions.

Why long-term investing continues to guide investor decisions

When we looked at why people are investing in the first place, the answers felt very familiar. Most aren't trying to chase the latest trend or predict the next market move. They're investing for life's bigger goals, whether that's growing their wealth over time, preparing for retirement or creating greater financial security for themselves and their families.

That long-term mindset continues to come through strongly in the research. More than four in ten investors expect their investments to perform well over the next three months, while over half are optimistic about the next year. More than a quarter plan to increase the amount they invest in the next 12 months, with many motivated by the desire to build wealth over the long term.

Investors continue to seek opportunities for future growth

There are also signs that investors are continuing to look for opportunities. While UK investments remain the largest part of many portfolios, interest in overseas markets is growing, particularly North America. We also found that themes such as artificial intelligence, renewable energy and healthcare are attracting attention from investors looking ahead to where future growth could come from.

Balancing investment optimism with market reality

For me, one of the most encouraging findings is that investors appear to be balancing realism with optimism. They recognise the challenges facing households, economies and markets, but they're not allowing uncertainty to completely dictate their decisions.

That's important because investing has never been about finding the perfect moment to start or predicting every market twist and turn. Markets will always experience periods of volatility, and there will always be reasons to wait for more certainty. The challenge is that certainty rarely arrives.
 

What can investors take from this?

If recent events have left you wondering whether to pause, change course or simply wait and see, it may be worth taking a step back and reminding yourself why you started investing in the first place.

Whether you're saving for retirement, building long-term wealth or working towards another important goal, having a clear purpose can help keep short-term events in perspective.

What stands out from our research is that many investors are doing exactly that. They're acknowledging the challenges around them, but they're continuing to focus on their longer-term goals rather than reacting to every headline.

That's a mindset that can serve investors well through changing market conditions and periods of uncertainty alike.