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Cash returns more than 40% in 10 years

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Written by: Paloma Kubiak
25/08/2017
Cash savers are more used to dreary headlines about returns but a £50,000 deposit could have achieved 40% growth over the past decade with a bit of active management and advice.

Independent analysis and advice site Savings Champion is standing up for savers and interest rates.

Last week research comparing the performance of cash against stock markets in the 10 years since the financial crisis revealed that a £50,000 cash deposit would have earned £619.07 in interest. This would give an overall return of 1.24%.

However, had the money been invested in the FTSE All Share (£5,000 in each of the 10 years), then the original investment would have grown to £81,015 over the past decade, according to Fidelity International.

It said this was a reasonable ten-year return of 62%.

But Savings Champion argues that rather than the £619 cash savings return, savers could have actually earned more than £8,000 (41%) if they had taken advice on their money.

Anna Bowes, director at Savings Champion, said: “It was disappointing to see another investment company using average cash figures to promote how well the stock market has performed compared to cash over the last 10 years.

“We’ve calculated that if you had chosen the best one-year fixed rate bond each year over the same term, your £50,000 would have grown to nearly £58,500, a return of nearly 17%, with total security of the underlying deposit and all interest earned.

“And if you deposited a single lump sum of £50,000 into the best one year fixed rate bond and switched the initial deposit plus gross interest each year, over the last 10 years your cash would have grown to over £70,800 – a return of more than 41%.

Bowes added that a big difference in returns is whether savers take advice. “Savers don’t have to settle for average, or even below average returns – there are far better rates out there,” she added.

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