An in-depth analysis of national financial accounts by Edinburgh investment giant Abrdn shows that UK adults “hold the smallest percentage of their wealth in investments of any G7 country” at a mere 8% — compared with 33% in the US and an average of 14% across the remaining G7 nations.

Investments are defined by Abrdn as shares and mutual funds.

The Abrdn report, due to be published on Monday, January 6, examined economic data from all seven countries, analysing how people split their wealth between different types of assets – including property, investments, pensions and cash.

The data showed that, instead of investments, the vast majority of UK adults’ wealth is tied up in perceived “lower risk” assets such as property (50%) and cash or cash-type products (15%).

The Abrdn report said the UK has the third highest proportion of wealth held in property and the third highest proportion in cash.

The UK also has the highest proportion of people’s average wealth in pension funds (19%).

“Our own Abrdn research suggests that UK adults have a particularly low financial risk tolerance, which would help to explain our low levels of retail investment,” said the report.

“Abrdn’s Savings Ladder Index, released in summer 2024, found that the majority of UK adults (55%) have a ‘low risk tolerance’ when it comes to investing, which would see them holding their savings mostly in cash or bonds …

“Arguably … the UK’s low levels of financial education play a role too. Financial literacy is crucial to being able to take considered and informed risks with your money, with the understanding that it could provide better long-term returns.

“It is why Abrdn is working with MyBnk, the UK’s largest specialist financial education charity for children and young people in the UK, to support their money management and financial empowerment programmes.

“The Abrdn Savings Ladder Index included a first-of-its-kind, on-going barometer for UK adult financial literacy. It found that 44% of UK adults (23.3m people) could not answer more than one of the ‘Big 3’ financial literacy questions – meaning they’d be classified as having poor financial literacy.

“The Big 3 questions come from the Global Financial Literacy Excellence Centre and are considered the gold standard for testing adult financial literacy. It is difficult to compare this to other countries. This is because, unlike 39 other countries, the UK doesn’t participate in the OECD’s study on adult financial literacy. But anecdotally, it appears to be a problem …”