Many small investors are holding onto shares based on emotional rather than rational reasons claims Axa.
Research conducted on behalf of Axa, by TNS,show 21% of those questioned, equivalent to more than nine million investors, say they own shares in a listed company, with 28% saying they hold onto the shares for at least three years.
Those surveyed produced a variety of reasons for keeping the shares, with more than a quarter saying they hold on to them either because prices have fallen and they want to wait to recoup their original investment, or because they are worried about selling at the wrong time and missing out on profit.
Around 12% of investors say they retain shares because they enjoy the shareholder perks, while 7%, equal to 900,000 people, claim sentimental reasons, saying they were bequeathed them by friends or relatives and don’t want to sell them.
But as well as being sentimental the survey also revealed some investors are also clueless, with 4% having no idea why they have kept shares, while 1% have lost their share certificates.
Colin Nelson, a spokesman for Axa, says while it is encouraging investors are holding onto shares as part of their investments, it is worrying how many people are investing their savings in the stock market without seeming to have a clear, rational strategy.
He says investors should be setting clear goals for what they want their investments to achieve as shares can play an important role, but investors should be clear about what that role is, whether it is income, capital growth or a mixture of the two.
Nelson points out we are all aware share prices can go down as well as up, but many investors appear to be hoping for the best and holding on to shares based on emotional reactions, such as indecision about the right time to sell, or sentimental attachment to the shares because they were a gift or bequeathed to them.
“Sitting down with a financial adviser and working out their objectives and then checking their investments regularly to ensure they are on track to meet those objectives can help to give investors more confidence and control of their finances,” says Nelson.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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