An interesting January 2025 report from Abrdn suggests culture could affect your financial decisions more than you think. Indeed, a lack of investing culture in the UK was linked to a relatively small portion of personal wealth being invested in equities when compared to other G7 nations, which could limit wealth potential. 

The research looks at how your money decisions aren’t just affected by how much you have, but what country you grew up in.

For example, the study found:

• Germans placed a high importance on personal privacy, which led to a strong inclination towards cash over credit cards. At a time when many countries are embracing digital payments, around half of all payments in Germany are still made in cash.
• Japanese adults hold the largest proportion of their savings in cash. This was associated with many consumers losing money during the domestic stock market bubble collapse in the 1980s and 25 years of prices falling or stagnating, which meant savers didn’t have to worry about the value of savings falling in real terms due to inflation.  

So, what does the research tell us about the UK? A key finding is that individuals could be missing out on investment returns simply because investing isn’t part of our culture. 

Only around 8% of personal wealth in the UK is held in equities 

When compared to other members of the G7 – Canada, France, Germany, Italy, Japan, and the US – personal wealth in the UK has the lowest exposure to equity markets, outside of pensions, as a percentage of wealth.

In fact, only around 8% of personal wealth in the UK is held in equities. In contrast, the figure is 33% in the US.

The Abrdn research links the far higher figure in the US to a strong investing culture that dates back to the mid-20th century. A campaign called “Own Your Share of American Business” ran for almost 15 years.

The campaign encouraged the average American to take an interest in stocks and shares to support their long-term goals. It also associated investing in US businesses with patriotism as it was seen as supporting the economy. This helped ingrain a strong culture of long-term investing in the US. 

By contrast, in the UK, investing campaigns have focused on single stocks and ran for only brief periods. 

Interestingly, research carried out in 2018 by the Centre for Economic Policy Research (CEPR) that Abrdn cited in the report suggests that it isn’t investment risk that is holding back UK savers. Indeed, the CEPR said UK adults had an “above-average” risk tolerance to investing but this didn’t necessarily translate into holding investments. 

Italians perceived investing in stocks, bonds, and funds as much riskier than UK adults. Yet, a similar number of adults in Italy and the UK are likely to hold investments.  

Rather than financial risk putting off UK savers, it could be the culture that means many overlook investment opportunities. 

So, if UK adults aren’t investing, what assets do they hold? 

UK savers favour cash and property over investing 

Around 15% of personal wealth is in cash

According to the Abrdn report, around 15% of the wealth held by UK adults is in cash. 

While cash might seem like a “safe” option, inflation may erode the value of your money.

As the cost of goods and services rises, the value of your savings in real terms can fall over time. Let’s say you deposited £10,000 into a savings account in 2020. According to the Bank of England, to maintain your spending power in January 2025, your savings would need to have grown to more than £12,400.

If the interest rate your savings earn is less than the rate of inflation, your money could be decreasing in value in real terms. 

Half of personal wealth is tied up in property 

Perhaps unsurprisingly given rising property prices, around half of personal wealth in the UK is tied up in property – double the amount held in the US. As property prices have increased relatively consistently over the last few decades, it may seem like a “safe bet”.  

Indeed, according to Land Registry, the average value of a UK property increased by almost £130,000 between January 2005 and January 2025. However, it isn’t guaranteed that prices will continue to rise at the same pace, and they could even fall. 

One of the challenges of holding a large proportion of wealth in property is that it’s often illiquid, especially if it’s a property that you live in. If you want to access some of your property wealth it can be difficult – you might need to sell your home, take out a mortgage, or use equity release to do so. 

An investment boost could support long-term goals for UK adults 

A lack of investing culture could be holding back the wealth aspirations of UK adults. 

While investment returns cannot be guaranteed, historically, markets have delivered above-inflation returns when you look at the figures over a long-term time frame. As a result, investing may deliver the opportunity to grow wealth in real terms and support long-term goals. 

If the UK embraced investing to the same extent as the US, it could unlock up to £3.5 trillion for capital markets and potentially lead to greater financial security in the future for investors. 

Of course, investing isn’t the right option for everyone, and it’s important to set out an investment strategy that suits your needs, circumstances, and tolerance to financial risk. 

Contact us to talk about your investment strategy 

If you’d like to talk about your investment strategy and how it might help you achieve your long-term goals, please get in touch. 

Please note:

This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.