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.
Financial advice could help you to protect your savings from inflation
Research demonstrates that people who seek the help of a financial adviser tend to be more successful investors over the longer term***.
After getting to understand you, your long-term goals and your attitude to risk versus potential returns, your adviser will help you to create a financial plan that’s unique to you.
If you have a financial adviser, it’s well worth speaking to them about your cash ISA and whether it’s still meeting your needs. If you are looking to generate a real return (i.e. above inflation) over the longer term, they can seek to identify a suitable solution for you.
Please remember though that your investment may fall or rise in value and you may not get back what you put in.
Quilter Financial Advisers
If you don’t have an adviser, you can get in touch with one of our financial experts.
Are you losing money in real terms?
Record low interest rates and inflation means the nation’s cash savers are struggling to get a decent return.
*As at September 2021
** £100bn+ in Cash ISAs could be losing value but savers don't know interest rate | Quilter Media Centre
***Financial Lives 2020 survey: the impact of coronavirus (fca.org.uk)