Savers who have deposited £3,000 a year into tax-efficient Individual Savings Accounts (ISAs) are 40% better off if they chose annual stocks and shares accounts rather than cash ones to make their saving and investment, according to fund manager Fidelity.

The average pot of money accumulated by a cash saver setting aside £3,000 a year – the maximum amount of cash permitted by the ISA rules – would today be worth almost £26,000 as a saving and investment sum.

But the same contributions invested in an ISA that tracks the performance of the FTSE All Share Index, the premier benchmark of the UK stock market, would have built up a pot of money worth £36,000 – 39% more than the cash saver.

Despite this, almost a third of savers polled in Fidelity’s annual Investor Watch survey said they would use this year’s ISA allowance for cash, while 29% are still undecided about their saving and investment plan this year.

“This sounds like a case of people being spooked by the current market volatility,” said City analyst Colin Perry. “But Fidelity’s figures show clearly the effect of staying in the market for the long term when it comes to maximising the value of your saving and investment.”

Richard Wastcoat, UK managing director of Fidelity International, said: “The benefit of investing in the stock market over cash for the long term is evident in our analysis.”