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

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

Written by: Paloma Kubiak
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.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

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.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
The mistake that could see your broadband bill soar by 89%

UK households are paying hundreds of pounds more than necessary a year for being loyal to their broadband supplier.