Investors are focusing on their short-term financial plans and challenges rather than considering the long-term impacts, according to a survey from asset management firm BlackRock.
Thinking about challenges in the future and factoring these into financial and investment decisions can benefit investors and help their plan be more sustainable and less exposed to volatility, the subsequent report says.
The short-term concerns and financial focus has been linked to the 2008 financial crisis. When asked what posed the greatest risk to their financial futures, respondents mentioned issues such as the state of the UK economy, job security and having to spend more than they earn
The report said, “These concerns reflect, in part, the impact of low economic growth since 2008, and demonstrate that people are more concerned about issues affecting them today, rather than in the future.
“Distant or less tangible concerns, like the financial impact of living longer, are comparatively low on people’s list of concerns.”
The UK’s population is expected to rise by almost 10 million in the next 25 years, driven partly by longer life expectancy. This will place additional pressure on services and care requirements, making it increasingly important that people plan for their futures and retirement.
Respondents to the BlackRock survey were found to be spending longer planning a holiday and researching a new technology or car purchase than they were reviewing their retirement plan. The report added, “Clearly, people have fallen into the habit of living for today.”
When the survey spoke to financial advisers, 65% said that focusing on short-term returns was a mistake some investors were making. More than half also said that investors were failing to factor in longer life expectancy.