Mukid Chowdhury
CEO, Trading 212
While the financial markets are no longer the preserve of the elite, more needs to be done to encourage people into retail investing.
Mukid Chowdhury, CEO of savings and investment platform Trading 212, gives his verdict on the autumn Budget and how it could affect the UK’s retail investment landscape.
Last month’s Budget cut the annual cash ISA allowance from £20,000 to £12,000 for under-65s, which ministers say will ‘encourage more people into long-term investment’. Do you believe people will switch to stocks and shares ISAs — or are they more likely to keep money in high street banks?
They won’t switch. Among our younger clients (roughly 25-45s), engagement with investing is already strong. They understand the benefits, are comfortable with taking market risk and are happy to use platforms like ours. The real challenge is the 45 to 65 bracket.
For that group, three things hold them back. First, a lack of confidence in how investing and trading actually work. Second, a strong preference for capital preservation – they have worked hard to build their nest eggs and would rather accept modest but predictable returns than see short term volatility. Third, a trust gap, fuelled by headlines about scams and get-rich-quick schemes that get wrongly conflated with mainstream investing.
Unless those barriers of understanding, risk perception and trust are addressed, simply cutting the cash ISA allowance will not on its own move savings from high street accounts into stocks and shares ISAs.
The Budget raises dividend tax by 2% across all bands. How significant is this to ordinary investors — and do you think it will discourage people from building income-generating portfolios?
I think it demonstrates a disjointed approach — saying you want to promote retail investing while quietly reducing the after-tax rewards for doing so. For ordinary investor relying on dividends for income, an extra 2 percentage points on tax is not trivial. So, the simple answer is, yes, it will discourage people from building income-focused portfolios.
From 2029, Budget changes will cap the National Insurance saving from pension salary sacrifice to the first £2,000 of employee contributions each year. Do you expect younger workers to turn more towards DIY investing, or will this mainly reduce their overall long-term saving?
The younger generation is already starting to take charge of its finances, helped by the amount of information available online.
The younger generation is already starting to take charge of its finances, helped by the amount of information available online. They’re far more tech-savvy, so they’re able to build pies and portfolios on platforms like Trading 212, which support long-term savings and investments. For many, that feels more transparent than a pension contribution that disappears from a payslip.
The Chancellor says the Cash ISA cut will ‘unlock capital for UK companies.’ Yet historically, retail investors don’t shift asset classes because of policy nudges — they stay where they feel safest. What blockers need to be removed before ordinary people genuinely see investing as accessible?
I’ll give you three. First, the standard ‘your capital is at risk’ warning is far too scary. We need more balanced messaging that explains the benefits as well as the risks. It should not disappear – it serves an important purpose – but in its current form it scares off first-time investors rather than helping them make informed decisions.
Second, the Government should look seriously at stamp duty. If trades within stocks and shares ISAs were exempt, you would see a very significant inflow into those accounts almost overnight.
And third, there is a broader point around the Government and the FCA. The FCA needs to be more clearly pro-innovation. Fintechs can still feel treated with suspicion, despite strong balance sheets and high levels of liquidity. Yet fintechs are the ones engaging UK clients in retail investing, driving down costs and democratising access to financial markets. It is no longer the preserve of the elite.
