UK investors are more optimistic about stock market returns this year, according to new research from Barclays Wealth Management. Investment protection, however, is a key concern, especially as the most popular reason for saving is retirement. As a rule, the over-50s are the most upbeat about market performance, with 16 per cent more optimistic than in 2005, and a further 35 per cent stating they are just as optimistic as they were a year ago.

For existing investors, this number is significantly higher, with almost three quarters (70 per cent) saying they are as confident or more confident in the market than last year. The majority of people questioned (67 per cent) are also very concerned about protecting the capital in their investments –a quarter (25 per cent) said they are more concerned about this than seeking to achieve above average returns.

However despite this buoyancy, over half of adults in this country aren’t currently taking advantage of ISAs as a tax efficient way of saving. 55 per cent of adults say they currently do not invest in these products, and only 24 per cent of current investors say they are planning on taking out an ISA before the end of this tax year.

Steven Mendel, Director, Barclays Wealth Management says: “It is encouraging that investors are more optimistic about stock market returns but many people are still not sufficiently encouraged to save into an ISA. The majority of potential investors are more concerned with protecting their capital than achieving above average returns. This does not mean that they should steer away from investing in the stock market, as there are a number of structured products out there which link stock market growth with protection of the original investment.” Investors should be aware however that investing in structured products means that they forgo dividend income.

Further findings reveal that nearly three quarters (71 per cent) of adults in this country describe themselves as inexperienced when it comes to investing, and this number rises in Scotland (77 per cent) and amongst women (78 per cent). Even half of existing investors consider themselves to be inexperienced.

Of the people planning to invest in an ISA this tax year, three-quarters plan to do so using a cash ISA (a slightly more popular option with women - 75 per cent vs 69 per cent) with just one-fifth (19 per cent) intending to take out an equity ISA. Interestingly, the most popular purpose for which ISA money is earmarked is for pension planning with two-fifths (37 per cent) using their ISA to save for retirement.

“We’ve discovered that the most savvy investors seem to be the over 50s – at Barclays 58 per cent of our ISA holders are in this age bracket. If you look at the percentage of people that are thinking about getting an ISA before the 6 April deadline, there are more over-50s than any other section of the population. It may just be a case of experience creating confidence, but with the wide range of structured products on the market, now is as good a time as any for the more cautious investor to dip their toe into stock market linked investments.”