One in seven investors would cash in investments at a loss if they needed unexpected funds

One in three (31%) investors would sell their investments if they needed cash to cover unexpected costs, and one in seven (14%) would do so at a loss, according to Alliance Trust’s Profit from Patience recent research.

 
When asked where they’d turn for money if they found themselves hit with an unexpected cost and without the cash reserves to cover it (e.g., for a broken boiler, or broken-down car), most investors would use their credit card – 40% – while one in five (20%) would borrow from friends & family.

Almost the same number (18%) would cash in their investments, but only if those investments were currently in profit. Concerningly, 14% would cash in their investments even if they were currently at a loss. Men are slightly more likely to do so, at 16% vs 13% of women.

Those with bigger investment portfolios were typically more likely to dip into their pots for cash. One in five (20%) of those with investments between £50,001 and £100,000 would cash in at a loss. This falls to 19% between £20,001 and £30,000, 16% between £10,000 and £20,000, 14% between £5,001 and £10,000, and 11% under £5,000. The exceptions to the sequence are those between £30,001 and £50,000, who are 12%.

Meanwhile, younger investors are much more likely to cash in their investments, at 43%, and twice as likely to cash in at a profit as their older counterparts (27% vs 14%).
 

 
When asked to self-identify as patient or otherwise, 74% of investors think of themselves as patient people. But surprisingly, patient investors are actually more likely to cash in their investments than non-patient ones; 32% would cash in, compared to 27% impatient.

Selling investments was a more palatable option for investors than taking out loans; 13% would take out a bank loan, and just 7% would take out a non-bank loan.

Mark Atkinson, spokesman for Alliance Trust, said: “Although it may be a necessity is some cases, cashing in on long-term investments to cover unexpected costs is never an ideal solution, and risks future financial security, especially for those selling at a loss.

“Though it may be tempting to dip into an investment, such as a pension fund, this could undermine your financial future.

“Where possible, it is always advisable to keep a separate savings pot to cover any unexpected costs, in order to keep your long-term financial goals intact.”
 
About the research
 
Consumer research was conducted by Opinium Research, who surveyed 2,000 UK adults between 6^th January and 10^th January 2023. Of these, 651 were investors (defined as having a Stocks & Shares ISA, a general investment account, and/or a self-invested/self-managed personal pension).
 
About Alliance Trust
 

Alliance Trust aims to deliver long-term capital growth and rising income from investing in global equities at a competitive cost. It blends the top stock selections of some of the world’s best active managers, as rated by Willis Towers Watson, into a single diversified portfolio designed to outperform the market while carefully managing risk and volatility. Alliance Trust is an AIC Dividend Hero with 55 consecutive years of rising dividends.