Investment pots have proved to be a financial ‘safety net’ for retail 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.

Research released by open banking solutions provider, Tink, assesses consumer behaviour of investors utilising DIY investment platforms. It found that half (50%) of respondents said investing during the pandemic helped to supplement their income. 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 plan to divest their investments in the next six months because they need the cash. Around 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. Some 70% view 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

Tink notes demand from armchair investors for more seamless, speedy processes to move money in and out of investment accounts.

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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. That is, without having to leave the platform app/website. 18% would consider switching platforms if this function was available elsewhere.

Tom Pope, SVP Payments & Platforms at Tink, said“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.”