Investment ISAs grow 3 times faster than Cash ISAs

The average Stocks and Shares ISA grew by around 11% in the past year, compared with an average 3.4% return from cash ISAs, a piece of research by Moneyfacts shows.

These figures are a startling reminder that while keeping some savings in cash is important for emergencies and immediate needs, keeping too much of your money in a cash savings account can end up costing you thousands in lost potential growth.

While there are no guaranteed returns with investing, history shows us that investing consistently outperforms cash when it comes to the kinds of returns you can achieve. That becomes more true, the longer the period of time you’re comparing.

Cash is also especially vulnerable to inflation, meaning that if real returns don’t at least keep up with the rate of inflation, savers’ funds are being eroded by rising prices.

The fear factor

As a nation, we’ve historically been very nervous about dipping our toes into investing. So, if that nervousness is what’s holding you back, don’t feel pressured to throw yourself into investing that carries a high level of risk. Advisors often recommend starting small with a diversified portfolio (where risk is spread across various sectors and geographies so you’re never putting all your eggs in one basket), and choosing investment funds that are aligned to your goals and values. Providers should always make it very clear what risk level each type of investment carries, so you can choose only those which match your tolerance to risk – and your appetite for risk.

For our tips on getting started and choosing investments, download our free guides here:

A Beginner’s Guide to Choosing Investments
A Guide to Starting Your Investment Journey