Statistics can prove anything – 78% of us Brits know that.
But here's a stat that is actually stopping us prosper. Half of us Brits are being scared away from investing their money as we're being baffled by "complicated" jargon.
In fact despite widespread media coverage 29% don’t even understand the term ‘inflation’. Amazingly six per cent of us have never even heard of the term, according to new research from Lloyds Bank, despite the mystery fella hammering our mortgage rates.
The UK’s most-misunderstood investment term is ‘asset class’ with 77% confused about its meaning (don't worry, more on that later...)
With only one in five (21%) claiming to have high financial literacy regarding investing, Lloyds Bank has partnered with renowned language expert and Countdown star Susie Dent to demystify daunting terminology and help people get comfortable with finance.
Susie said: “It’s clear from this research that the language of investments is one many of us simply don’t understand.
"Happily, there are ways in which we can get far more comfortable with unfamiliar vocabulary. From using a dictionary to taking notes, it’s possible for anyone to get to grips with a new topic and its unfamiliar terminology.”
With this in mind Susie Dent’s Dictionary Corner has come up with an easy glossary for the most misunderstood terms
What our most-misinterpreted investment terms mean
Asset class (77%) – A grouping of investments viewed as a distinct category. Equities and cash are two examples of asset classes. Etymologically, an asset was literally something of which you had enough: it is an old form of the French assez, ‘enough’.
Growth fund (73%) – A growth fund invests in the stocks of companies that are poised to grow revenue or earnings at above-average rates.
Gilts (70%) – Loans taken out by the government when it wants to raise money with a fixed rate of interest paid to lenders. UK government bonds are known as ‘gilts’ because, historically, the paper certificates had a gilt edge.
Risk appetite (62%) – The level of risk an investor is willing to take. Different investments carry different levels of risk and returns. ‘Appetite’ is ultimately from the Latin appetitus,‘ desire for’. ‘Risk’, on the other hand, is from the Italian risco, ‘danger’.
Equities (59%) – Equity is the value of a company, which is divided into many equal parts that are owned by the shareholders. If you have equities in a company, you are one of its owners. It comes from the Latin aequus, meaning ‘equal’.
With 30% of people considering investing at some point in the future but not being willing to commit, Lloyds Bank estimates this could equate to as much as £17billion remaining in savings accounts.
Jo Harris, Relationship Banking, Director, Lloyds Bank, said: “We know there’s appetite amongst Brits to make their money work harder, but investing remains a confusing and intimidating topic for millions."
With this in mind, Lloyds Bank has launched a new Ready-Made Investments service, which makes it easier for customers who want to start investing from £50 a month. It has been developed specifically for those who believe that simpler instructions and having expert help would make investing less daunting.
Jo added: "Our Ready-Made Investments service aims to tackle that issue, with affordable options and simple terminology designed for those with little or no investment experience. Our funds are ready-made by experts, so you don’t need to pick your own stocks and shares.”
- For more information on Lloyds Bank’s Ready-Made Investments, visit Lloydsbank.com/RMI. No investment experience is necessary as the funds are ready-made by experts, so people don’t need to choose their own stocks and shares.
