Tink Uncovers Armchair Investors Forced to Cash in Investments to Help Navigate Cost-of-living Crisis

New research released by Tink, the market leader in open banking, uncovers that investment pots have proved to be a financial ‘safety net’ for armchair investors during challenging economic times. This suggests a shift in investing behaviours from long-term ‘set and forget’ portfolios, to needing instant cash to mitigate rising living costs.

This is according to a survey of active retail investors in the UK who use DIY investment platforms. It found that half (50%) of respondents said investing during the pandemic helped to supplement their income, and in more recent times, over half (51%) have cashed in some of their investments to help with the cost of living. What’s more, 42% of retail investors who owned a home have also dipped into their investment pots to reduce mortgage borrowing due to rising interest rates.

In fact, for many, investing isn’t an affordable option today. Nearly a fifth (19%) of retail investors surveyed plan to divest their investments in the next six months because they need the cash, while two-thirds (66%) worry about their investments against the current economic climate.

Investments play a key role in day-to-day financial management

While it’s clear investment pots are now being used as financial accounts by retail investors, the research also suggests that respondents are engaging with DIY investment platforms on a daily basis, indicating an increasing reliance on them. The survey found the majority (61%) of respondents said that investments play a key role in their day-to-day financial management, with a massive 70% viewing them as a way to future-proof their finances.

However, concerns remain around current DIY investing processes. For example, an estimated two-thirds (66%) worry about losing money on an investment platform because it has taken too long to top up their account, and 70% cite being locked out of investments as a top concern.

UX concerns spark desire for improvements in investing apps

These findings from Tink reveal demand from armchair investors for more seamless, speedy processes when it comes to moving money in and out of their investment account.

For example, when using investment apps, three-quarters (74%) of those surveyed would like to be able to instantly transfer money from bank accounts to investment accounts, without having to leave the platform app/website, with 18% considering switching platforms if this function was available elsewhere.

In fact, retail investors go as far as to say that they would part with more cash for improved user experiences. An estimated one-in-five retail investors would invest more if an investment platform had an easier or more instant onboarding process, while a similar number (18%) would be encouraged to invest more if an investment platform allowed them to make instant payments to their investment account.

Tom Pope, SVP Payments & Platforms at Tink, commented: “During the cost-of-living crisis, armchair investors are leaning on their investment pots as a way to support their day-to-day finances. But with many people today having less available money to invest with, investment apps are competing for a shrinking share of wallet.

“Against this backdrop, investment apps can’t afford to deliver poor user experiences or friction-filled processes. Investors want to be able to transfer money seamlessly between their bank accounts and investment accounts without needing to leave the app or website. By leveraging open banking payments, investment platforms can transform user experiences and support customers as they look to their investments to help them through this period.”