Financial security is about more than meeting day-to-day needs and managing unexpected costs. It also means building assets and making progress towards longer-term goals, whatever those may be.
At the Centre for Inclusive Money at Nest, we set out to answer, ‘What comes after building an emergency savings buffer?’
Through our new programme of work, Investing and Growing, we want to identify, co-create and test ideas to ensure low- and moderate-income households benefit from investing.
In our first publication, Beyond the buffer (PDF), we found that roughly 1 in 5 people in low- and moderate-income households were already investing; and that another 1 in 5 could have the financial footing to start investing alongside saving, equivalent to around 2.3 million people in the UK.
Of course, investing won’t be right for everyone. And, supporting more of these households to participate in investing will require action to address the multiple barriers that people face. These include low confidence, misconceptions about investing and the perception that investing is not for ‘people like me’, as well as products that have historically been designed around the needs of higher-income households.
Today, we’ve published, Opportunity map: Unlocking investing for more low- and moderate-income households (PDF) which focusses on potential solutions. Through a combination of desk research, expert interviews and industry roundtables, we’ve identified six opportunity areas that could help more people become investors for the first time:
- Helping people start investing smaller amounts earlier alongside saving
Many people are unsure about when to start investing or think they need to build a very large cash buffer first. But waiting for the “perfect moment” often means never getting started. We explore opportunities to support small-scale investing alongside saving, and the potential use of targeted support, technology and advice to help people begin.
- Making investing feel relevant and normalised
Most people who aren’t investing think that it’s not for ‘people like them’. We look at how trusted voices, peer networks, workplaces and key life moments could help make investing feel more visible, relatable and achievable for more people.
- Reducing the need to self-insure with cash
Low- and moderate-income households can feel more exposed to shocks and choose to hold more money in cash to help manage that uncertainty. We explore whether safety nets, insurance and clearer information about financial protections could help people feel more comfortable allocating some money towards investing.
- Improving understanding of investment risk and the risks of holding cash
People often overestimate the risks of investing, whilst overlooking how inflation erodes their cash savings over time. We examine how clearer and more balanced communication about risk and return, including from familiar voices in trusted environments or in-app assistants, could support better-informed decisions.
- Making investment choices simpler
Choosing where, how and what to invest in can feel daunting. We consider ways to reduce complexity, simplify journeys, improve comparisons and widen access to guidance so that getting started feels less overwhelming.
- Supporting people to build and sustain an investment habit
Getting started is only part of the challenge. Sustaining investing through the early months is important too as that’s when people start to see themselves as investors. We explore approaches that could help people build confidence, develop an investor identity and help people stay invested through periods of uncertainty and market volatility.
Progress is likely to require action across products, communications, regulation, technology, workplaces and consumer support, and we can’t do this work alone.
If you’re interested in working with us to turn some of these concepts into real-world trials and learn what really works in practice, we’d love to hear from you: hello@inclusivemoney.org.uk
Finally, a sincere thank you to the policy, industry and consumer experts who contributed their insights through interviews and roundtables, and to the individuals who shared their experiences with us through qualitative research. This publication would not have been possible without your generosity, expertise and willingness to engage with the challenges and opportunities of making investing more accessible and inclusive.