Only a fifth of retail investors consider themselves very confident investors, and a majority of those less confident say it is because they are worried about losing money.

Just 57 per cent of amateur retail investors said they felt confident according to data from investment trust Alliance Witan. 

Almost three quarters, 71 per cent, of those who weren’t confident said their investment decisions are held back for fear of losing out.

Alliance Witan surveyed 1,000 adults with investable assets of more than £10,000, and 410 of those had made a loss on an investment in the past five years.

Almost a third of those lacking confidence said they don’t think they have enough knowledge to invest, placing a dearth of financial education as one of the key causes for a lack of UK investors.

This isn’t changing, either, as figures from Boon Brokers reveal that 74 per cent of young people weren’t aware of having been taught any financial education at school.

However, 41 per cent of confident investors said they had increased their knowledge of the subject by reading books and online resources to ensure they could make informed decisions.

The Government is considering reforms to cash Isas in a bid to push more savers towards investing their assets as part of an ‘investing culture’

Even for those who do feel that they know what they are doing, many face concerns such as needing access to money they could otherwise invest. 

Some 27 per cent said this was the main reason they were worried, while a further 31 per cent cited concerns over the world’s economic climate is their main worry.

Combined, this leaves a stark divide between those investing and those keeping all their cash in savings. According to the Financial Conduct Authority, some 90 per cent of adults have cash savings, but just 35 per cent have investments.

Mark Atkinson, senior director at WTW, which manages the Alliance Witan Trust, said: ‘Encouraging people to invest is a key priority for the Government – not only because it helps boost the economy, but it also puts consumers on a better financial footing.’

The Government is considering reforms to cash Isas in a bid to push more savers towards investing their assets as part of an ‘investing culture’ and provide Britain with a much-needed boost.

However, there are concerns that slashing cash Isa allowances from their current £20,000 could instead see savers place their money in savings accounts paying lower interest rates, rather than investing.

This is largely due to the knowledge gap that exists around investing and the perceived risks of doing so.

While investing does carry risk, the benefits of investing are clear over the long term, with investing returns routinely beating those offered by cash savings.

Atkinson said: ‘Crucially, successful investing means investing for the long term – typically more than five years. So the aim is for that pot to be untouched. 

‘That means that investing money should only be done once a good-sized cash pot has been built up, ready for use in an emergency.’

How to be a confident investor 

Of those investors who were confident, half said their main piece of advice was to build an emergency fund before committing any money to investing. 

It is normally recommended than an emergency fund should consist of between three to six months’ income.

Atkinson said: ‘Those starting out should heed the advice of more seasoned investors, and build up their confidence with tried-and-true methods of investing.

‘History tells us that those who keep their holdings well diversified and allow their returns to compound over time will ultimately stand a good chance of building wealth in the long-term, and be all the more comfortable for it.’

Some 39 per cent of confident investors said they choose options like funds and trusts that are already diversified across geographies, sectors and strategies, instead of just picking single stocks.

Atkinson added: ‘Lower risk investing vehicles such as global equity multi-manager funds that are typically spread across a wide range of geographies, sectors and styles, can be more insulated from volatility than funds run by a single manager, but that doesn’t mean that there won’t be fluctuations in value. 

‘It’s an old but true adage – time in the market is more valuable than time out of it.’

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