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Savers' risk appetite surges as interest rates flat line

A growing number of savers in the UK are turning into risk-takers as they seek a bigger return on their savings after eight years of low interest rates, according to new research by Wesleyan.

Interest rates have been held at record lows since first being cut to 0.5% in March 2009, and again to 0.25% in August 2016. Now, research from the specialist financial mutual has found almost a quarter (22 per cent) of people are now taking more risk with their savings than this time last year, with eight per cent saying they have significantly increased their risk appetite during that time.

A fifth (21 per cent) of those who have changed their attitude to risk over the past year did so because low interest rates made them want to seek out better returns elsewhere. Meanwhile, wider economic events such as Brexit have made a similar number (21 per cent) take a more cautious approach to their savings.

When it comes to products where people keep their hard-earned long-term savings, the most popular options include savings accounts (38 per cent) and ISAs (33 per cent).

One in five (22%) people now use a current account for long-term savings. The unusual shift towards keeping savings in everyday accounts could be a by-product of the ultra-low interest rate environment and increasing competition among banks offering relatively high interest rates on current accounts.

Vicki Wentworth, Chief Customer and Strategy Officer at Wesleyan, said: "Low interest rates have increased consumer spending, but they have also led to people increasing their risk appetite as they seek higher returns on their savings.

"In some cases, higher risk investments can help savings pots grow, but what we're seeing now is savers taking more risk than they might normally be comfortable with to combat record low interest rates.

"We recommend all savers take financial advice when reviewing their savings and investments. This will ensure they fully understand the associated risks and are comfortable before making decisions that could affect their finances for years to come."

Wesleyan provides specialist financial advice and services to doctors, dentists, lawyers and teachers.

'WESLEYAN’ is a trading name of the Wesleyan Group of companies.

Wesleyan Assurance Society and Wesleyan Bank Ltd are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Wesleyan Financial Services Ltd, Wesleyan Unit Trust Managers Ltd, Practice Plan Ltd and DPAS Ltd are authorised and regulated by the Financial Conduct Authority.  Advice about investments, insurance and mortgages is provided by Wesleyan Financial Services Ltd.

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