Research from Schroders shows that when ISAs were first launched in 1999, total cash ISA subscriptions were £12.3bn compared to £16.1bn for stocks and shares ISAs – in other words, just 43% of the money went into cash ISA savings accounts.

Since then, there has only been one other tax year – 2000/01 – where investors have put more money into stocks and shares ISAs. By the end of 2016/17, 75% of the money went into cash ISAs despite a global economic recovery helping stock markets to make decent gains.

At the same time, for much of the past decade, putting money into cash would have been a poor choice. Research from Chelsea Financial Services found that anyone who kept cash savings since rates were cut to 0.5% could have missed out on significant stock market gains.

It stated: “£1,000 in a cash account paying the base rate would be worth just £1,042.60 today. In contrast, anyone choosing to invest in the average UK equity fund or UK equity income fund would have seen their pot of money grow to £3,093.30 or £2,959.40 respectively.”

Schroders research shows a similar pattern. It points out that saving money into a cash ISA over the last 18 years would have returned four times less than a stocks and shares ISA, although cash has been more stable.

Schroders’ findings are based on analysis of average ISA savings rates collated by the Bank of England which go back to the launch of ISAs in 1999. It shows that £1,000 put into the average cash ISA at the start of the 1999/00 tax year would have been worth £1,162 by the end of the 2016/17 tax year, once the effects of inflation are taken into account.

By comparison, £1,000 invested in the UK stockmarket in April 1999 could have been worth £1,841 by the end of the 2016/2017 tax year. Based on the FTSE All-share total return index, which includes dividend reinvestment, an investor could have achieved an annual growth rate of 3.66%, before charges. This is in spite of two major stock market crashes –  the bursting of the dotcom bubble at the turn of the millennium and the global financial crisis in 2008.

James Rainbow, co-head of UK intermediary business at Schroders, said: “The data suggests investors are still nervous about investing following two market collapses in the first decade of the century. It is hard to blame them. It has been a tumultuous start to the new millennium. Keeping your investment in cash at least prevents the investor from having to endure the emotional rollercoaster ride that comes with stock market fluctuations.

“However, it is a state of mind. Cash is effectively a false safety net in times of ultra-low rates because of the corrosive effect of inflation on purchasing power. Providing investors take a long-term approach, usually more than five years, the stock market has historically provided a better rate of return.”