According to the FCA’s new Consumer Investment Strategy, 8.6 million people are saving more than £10,000 in cash which for many could be working much harder if invested.
People in the UK hold billions of pounds in cash ISAs even though the average rates of return are currently below the rate of inflation. With inflation now at over 3%* - more than the average cash ISA - this will mean your cash ISA could be losing money in real terms, by having less buying power in the future than you think.
‘Cash crisis’ builds as rates plummet and households build savings
According to the latest figures, over half of the £620 billion ISA market sits in cash ISAs where investors do not know what their rate of return is**.
Even more cash is likely to have been parked in ISAs for months as household savings increased dramatically due to lower spending and people setting more money aside due to fears about the economy.
Are you one of the millions who could be better off with an alternative to a cash ISA?
Cash ISAs have, for a long time, been an easy way to save money with comparatively little risk. But the time may have come when it’s worth looking at alternatives, with the potential for greater returns. Invested monies can work harder, with their purchasing power having a better chance of protection against the effects of inflation.