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Nest egg savers should crack stocks & shares ISAs, says Virgin Money

Your Money
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More than five times as many ISA savers are putting money away for a nest egg compared with those saving for a rainy day – but they are steering clear of stocks & shares ISAs.

According to research from Virgin Money, 53% of ISA investors are saving long-term for a nest egg compared with just 12% who are putting short-term cash away for a rainy day. But analysis of HMRC data shows almost 3.5 times as many cash ISAs are opened each year compared with stocks & shares ISAs.

Virgin Money is encouraging savers to consider the long-term benefits of stocks & shares ISAs – and their potential to provide inflation-beating returns – with investors in the Virgin Index Tracking Trust enjoying gains of 39.15% after charges between 31 December 2008 and 31 December 2011.

Gains over longer terms include 43.44% between 31 December 2001 and 31 December 2011 and an impressive 165.8% since the fund launched on 31 March 1995 to 31 December 2011.3

Scott Mowbray of Virgin Money said: “Making the most of cash and the stocks & share elements from the ISA allowance could be the key to people achieving their savings goal. Savers clearly understand the benefits of generating tax-efficient returns by investing in ISAs, however, our research suggests that while many people want to save for the longer term, they are adopting a short-term strategy. Savers should consider whether their money is working as hard for them as it could be.

“Adopting a mix and match approach using both cash and stocks & shares ISA allowances, depending on what you are saving for and what you can afford, can help you get the balance right between rainy day money and saving for the future as our research suggests.”