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View the article online at http://citywire.co.uk/money/article/a579578

'Asset rich, cash poor' Brits have just £1,574 in savings

Britons have an average of £40,900 worth of physical assets, such as cars and jewellery, but have very little in cash savings.

 

by Michelle McGagh on Apr 02, 2012 at 14:52

'Asset rich, cash poor' Brits have just £1,574 in savings

People in Britain are sitting on an average ‘physical’ wealth, things such as cars and jewellery, of £40,900, but have just £1,574 in cash savings.

The ‘Asset Rich, Cash Poor’ index devised by personal asset lender Borro shows the value of household assets in the UK, excluding property and investments, stands at a combined £1 trillion, an increase of 51% since 2006.

The average household has increased the worth of its assets by 4.7% since 2006, a reflection of the pre-recession spending boom.

Conversely, the average adult has just £1,574 in savings, a 15% decrease on last year, and 27% of people have no savings at all.

Those living in the South East are the most asset rich, with the average amount of household wealth standing at £48,400. Londoners are the least asset rich, with an average of £35,900 of physical assets, because more people rent in the capital and they are less likely to buy valuables and collectibles.

Region Average physical wealth (2006/2008) Average physical wealth (2008/2010)
South East £45,200 £48,400
East of England £44,000 £45,700
South West £43,100 £43,400
Yorkshire & the Humber £36,900 £42,300
East Midlands £40,300 £40,700
Wales £34,800 £39,300
West Midlands £37,500 £38,800
Scotland £37,000 £38,400
North East £38,400 £37,100
North West £35,700 £36,400
London £34,300 £35,900
Average £39,100 £40,900

Paul Aitken, chief executive officer of Borro, said Britons were becoming increasingly asset rich but cash poor and people were continuing to spend, although not at the same levels as seen pre-recession.

‘As people’s savings deposits have decreased we are seeing a nation of asset rich and cash poor adults emerge. More people are realising that they hold a wealth of assets that they can use to access finance – either to fund a business opportunity… or to cover temporary cash flow issues.’

The average amount that Borro lends has increased to £5,000, and the majority of loans are against diamond jewellery, luxury watches, prestige cars and fine art.

In 2006, £5.9 billion was spent on jewellery, clocks and watches, but cars have experienced the highest increase in spending, up 40% between 1997 and 2007. Nearly three-quarters of households, 73.4%, owned at least one car between 2008 and 2010.

15 comments so far. Why not have your say?

Raymond Hurley

Apr 02, 2012 at 18:11

What Rubbish.

To exclude investments, such as stocks, shares and bonds is silly.

More sloppy journalism from Citywire

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Alex Yew

Apr 02, 2012 at 18:38

Unless a car somehow makes money for the owner, it is a liability and loses value from the moment it leaves the showroom/ garage. It is not an asset.

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Chris Harris

Apr 02, 2012 at 19:12

Logic seems a bit wrong, to put it politely.

If the overall value has gone up 51% but the average household value has gone up 4.7%, the total number of households would appear to have gone up 44.22%.

I knew Britain was getting crowded …but!

The other explanation is that that there has been a massive switch of value from property and shares to other assets.

Thoughts?

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Jeremy Bosk

Apr 02, 2012 at 19:13

Raymond

Citywire are reporting on a survey by a pawnbroker. Nobody with liquid investments would pawn their valuables and pay extortionate interest rates when they could sell shares and pay no interest. Foregone dividends are relatively trivial. So Borro were right to ignore shareholdings which are irrelevant to their business.

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Phil_G

Apr 02, 2012 at 20:51

This is daft. The index excludes property and investments. So it's just the value of the car, the furniture, cash and trinkets. Completely meaningless.

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Raymond Hurley

Apr 02, 2012 at 21:12

Phil,it's not just daft,it is completely stupid.

Jeremy Bosk justifies the article by commenting that 'Citywire are reporting on a survey by a pawnbroker'

What is the value of a survey of the impecunious.?

Who paid you to write your comment Jeremy?

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Jeremy Bosk

Apr 02, 2012 at 23:23

Nobody pays me.

Even the impecunious spend money on basics which is what keeps supermarkets going.

The impecunious who have non-financial assets sometimes sell or pawn those assets. Pawn brokers and doorstep lenders make profits from the impecunious. Citywire readers can invest in both.

The impecunious also drink, smoke, gamble, watch TV, eat junk food, have children and do all kinds of other things that make money for investors.

Think about it.

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William Phillips

Apr 03, 2012 at 09:51

Believe it or not, folks, most people don't have 'stocks, shares and bonds'. I realise this is incredible to all you financial wizards, plutocrats and sophisticates, but so it is.

Most people have equity in their homes, some pension entitlement, a bit of cash for a rainy day, a lot of pawnable junk and a gradually dwindling faith that 'the State' will look after them when all else fails. The public sector workers sleep soundest on their pension pillows.

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Mr Grumpy

Apr 03, 2012 at 10:27

I hold approximately 25 times as much in equities as in cash, for the obvious reason that I earn infinitely more than the pathetic interest rates on offer on the high street or with HMG.

Ah yes - statistics - as the old one goes "with your feet in the oven and your head in the freezer, overall you're perfectly comfortable"

I agree with the other critical comments - total rubbish journalism - are you bored Michelle?

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Jon

Apr 03, 2012 at 11:03

Since Sterling has fallen by 25% against major currencies, then this should be factored in. We keep having these sorts of reports measured in a devalued currency, such as GDP........

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Skint

Apr 03, 2012 at 13:10

Wonder how many of those cars are actually fully paid for.

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Jeremy Bosk

Apr 03, 2012 at 13:17

On the theme of how the poor spend their money and investors can profit, see this story on the fastest growing businesses in the North West:

http://www.thebusinessdesk.com/northwest/news/305149-b-amp-m-leads-the-way-in-growth-table.html

You can't invest in B&M as it is a private company but there are plenty of other budget retailers.

Skint - very few people pay cash for their cars, Citywire readers can invest in car finance companies such as S&U.

Any fool can get a mediocre performance by investing in the FTSE 100. Lateral thinking is needed to do better than average.

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Bryan Jefferson

Apr 08, 2012 at 13:21

Jeremy

Since when did pawnbrokers describe themselves as 'personal asset lenders'? Or is it just a Citywire journalist trying to hide the true source of her data?

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Debt-free

Apr 10, 2012 at 10:08

Very sensible to exclude property. Given that the average Briton has £1574 of cash (and an income of £26K a year) there is simply no way house prices can stay as high as they are. £1574 is slightly less than the STAMP DUTY on an average (£160K) house!!!

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Jeremy Bosk

Apr 10, 2012 at 10:32

Bryan

Since they hired a marketing department and an advertising agency! Your local refuse disposal operator (bin man) or Environmental Health Operator (rat catcher) could probably explain the process to you.

We all know how to read the subtext these days. So nobody is trying to hide anything - except possibly the pawn broker who is trying to live down unpleasant historical associations.

Albermarle and Bond or H&T would make profitable investments in our present economic plight.

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