Higher-income investor confidence falls amid economy concerns

Confidence among investors with household incomes of £80,000 or more fell considerably in the third quarter, with sentiment towards the UK economy worsening, Boring Money has found.

Its Investor Confidence Index showed that confidence among higher-income investors declined from 64 in July to 53 in September, before falling to 47 in October.

Sentiment towards the UK economy saw its biggest dip in October, dropping from -28 to -40 on the index.

Among all investors, confidence declined to its lowest level since April, falling from 52 in July to 42 in October.

Boring Money noted that the findings collected in October indicated that investors were becoming more concerned about the economy and financial markets, even before the Budget.

Despite declining confidence, investors continued to make alterations to their portfolios in October, with 23 per cent making changes to their investments.

Almost half (44 per cent) of those who had made changes increased the amount they had invested.

Furthermore, defensive investment behaviour fell slightly during the month, with 19 per cent moving more money into cash, down from 25 per cent in September, and 22 increasing exposure to defensive assets, compared to 29 per cent in September.

However, the Budget was found to have negatively affected confidence in personal finances, with just 8 per cent of respondents to a Boring Money snap poll saying the Budget had a positive impact on their financial sentiment for the next 12 months.

Three in 10 said they planned to cut back on spending as a result of the Budget.

More than eight in 10 (82 per cent) said they disagreed with the proposed increase in tax on savings income, the most unpopular Budget announcement.

However, 39 per cent planned to pay more into their ISAs or other investment vehicles due to the announcements at the Budget.

“Investor confidence fell in October as did expectations about the outlook for the S&P 500,” commented Boring Money CEO, Holly Mackay.

“It’s notable how confidence has fallen amongst higher earners. Given the combined triggers of rising inflation, a poor month for tech stocks and the threat of the UK Budget, I’m not surprised that higher earners are feeling less confident about the outlook.

“As we moved into November and digested the Budget, the unexpected hike in tax on savings is, by some distance, the least popular measure among Boring Money readers, and this will obviously impact higher rate taxpayers more.

“If we see continued volatility in markets, I wouldn’t be surprised to see investor confidence remain low in November, as all households feel the pressure from multiple sources.”

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