You are here: Home - Saving & Banking - News -

Cash savers miss out on £127bn because they’re scared to invest

0
Written by: Paloma Kubiak
12/11/2018
The UK’s addiction to cash ISAs means savers have missed out on £127bn of returns by shunning the stock market over the past two decades.

Since 1999 when ISAs were introduced, savers have received £75bn in interest. But less popular stocks and shares ISAs have performed considerably better, achieving returns of £202bn via the FTSE All-Share Index.

Analysis from Scottish Friendly and the Centre for Economics and Business Research (CEBR) revealed that a cash saver using their ISA allowance each year since 1999 would have achieved around £20,628 in tax free interest.

But this is less than a third of the £70,987 an investor would have achieved from a stocks and shares equivalent.

Despite the difference in returns, UK savers are shown to be reluctant to ditch their cash ISAs in favour of stocks and shares.

A Scottish Friendly survey of 2,000 people revealed that 40% have a cash ISA, but just 18% pay into an investment ISA.

For a quarter, the reason is that they don’t fully understand how to invest, while a fifth said they’re afraid of losing money.

Calum Bennie, savings specialist at Scottish Friendly, said: “Thousands of people across the country are probably thinking they are doing the sensible thing by saving into a cash savings account for their future. But many of them will not know that the value of their cash is being eroded in real terms due to the toxic combination of pitiful savings rates and rising inflation.

“So the message to savers is clear: keep an adequate amount of money in an easy access cash account in case of emergencies, of course, but if you’re saving for your future then investing can offer potential for greater returns. The issue is many people are either afraid to make that first step into investing or have no idea how to invest.”

For top first-time investing tips see: Route to riches? Getting started in investment

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week