Bulletin for Agents & Managers: Brits v Americans – Why We Invest Differently
< 2 min read – written by a human, not AI
Working with clients on both sides of the Atlantic, one thing shows up pretty quickly.
Americans are comfortable with the stock market. We Brits are comfortable with property.
And that difference matters more than you may think.
The US Investing Journey
In the US, the story often goes something like this:
“My grandad bought me my first stock when I was 5, and I held it until I was 21…”
You hear that a lot.
But its not the only factor, Investing is far more integrated into the culture. A lot of Americans know they need to enrol in their 401k (company pension) when they get their first job. Financial news is common watching in a lot of US households. The strength of the stock market is a large driver of who gets into office for the mid-terms and elections.
And with apps like Robinhood, investing is even more accessible. It’s talked about in bars, on podcasts, across social media.
All of that lowers the barrier.
Americans grow up understanding the stock market, and that gives them the advantage when it comes to putting cash to work and earning a return over time.
The UK Investing Journey
In the UK, the story is different.
“My parents bought their house for £60,000 in the 80s and now it’s worth £600,000.”
A success story, but the story is about mum and dad, not themselves. Their investing journey often starts a lot later…
Property in comparison is far more embedded in British culture, Homes Under the Hammer is a lot of peoples recollection of daytime TV. Everyone knows a story of some professional footballer who owns 50% of homes in Liverpool, and having a lot of success doing so.
And to be clear, that’s not a bad thing.
But there are real differences between the two.
Property has a very high barrier to entry. A property is far more expensive than owning a share of Apple, Microsoft or Amazon[UG1] .
£200,000 wouldn’t be unrealistic as your starting point, versus buying shares in a global business for a few hundred pounds.
Then you’ve got:
• Stamp duty
• Legal fees
• Maintenance
• Tax
• Higher rates capital gains
It’s lumpy. It’s expensive. It’s hard to access.
And that’s where it holds us back.
If you can’t get started early, you lose time. And time is the biggest driver of returns.
At the same time, and this is the bit that doesn’t get talked about enough, UK property has generally underperformed global equities over longer periods.
Using MSCI World total return data and the Office for National Statistics UK House Price Index, global equities have compounded at roughly 8–9% per annum since the late 80s, versus lower growth in UK property prices.
So we’ve backed the thing that feels safe, but hasn’t necessarily delivered the best outcome.
Where This Leaves The Brits
It can all be brough back to one thing, education.
If more people understood the stock market properly, it wouldn’t feel risky or unfamiliar. Things like global equities are some of the ways to protect against inflation over time, which is one of the biggest risks for any investor.
But in the UK, that understanding just isn’t there in the same way.
Owning shares in good businesses shouldn’t feel unusual or speculative.
For many Americans, it never did.
In the UK, it still does.
David James Wealth USA is an Appointed Representative of Blacktower Financial Management Limited and a member of Nexus Global (IFA Network) which is a trading name of Blacktower Financial Management Limited who are authorised and regulated in the UK by the Financial Conduct Authority. FCA Reference: 188611.
Estate Planning, Inheritance Tax Planning and Tax Planning are not regulated by the Financial Conduct Authority
The value of investments and the income from them, can fluctuate, and may loose value.
Investment advice and investment advisory services offered and provided through Blacktower Financial Management US, LLC. This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, tax advice, tax recommendations, investment recommendations or investment research. You should seek advice from a professional before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.
[UG1]Name at least 2 other examples of stocks in addition to apple. Providing only this example can be misinterpreted as giving advice to buy Apple shares.
