Savers looking for a new Cash ISA should prepare themselves for shockingly low interest rates.
Banks and building societies are paying an average of just 0.4% on Cash ISAs, according to Bank of England data.
Even the highest-paying Cash ISAs are barely offering 1% — and to get such rates you have to tie up your money for 5 years!
But if you’re prepared to stash your cash away for 5 years, why not consider a Stocks & Shares ISA instead?
Shares tend to beat cash over 5 years
Investing in a Stocks & Shares ISA gives the opportunity of higher returns than a Cash ISA.
Of course, stockmarket investment involves risk to your money, but history suggests that over 5 years you’re likely to do better than sticking to cash — and potentially much better.
In the UK, shares have beaten cash three-quarters of the time, according to a long-run analysis* of 5-year returns between 1899 and the present.
In recent decades since 1996, the stockmarket’s 5-year return** has averaged 49%.
And, as the chart below shows, returns from the FTSE 100 index (including dividends) have been as high as 150% over the strongest 5-year periods.
On the other hand, in the minority of 5-year periods when the UK market (including dividends) has lost money, those losses haven’t exceeded 25%.
Shares do well over most 5-year periods
Investing with InvestEngine
InvestEngine’s Stocks & Shares ISA offers the choice of investing for growth or regular income of up to 4.3% a year (estimated and variable).
We build and manage an investment portfolio at a risk level you’re comfortable with.
All for a management fee of just 0.25% a year (costs also apply to the investments in your portfolio).
And you can access your money whenever you want without penalty — unlike most of those fixed-rate Cash ISAs 😉.
PLUS for a limited period we’re offering a £50 Welcome Bonus*** to new customers!
Try our online questionnaire to see the investment portfolio we’d build for your ISA.
*Barclays Equity Gilt Study
**5-year total returns including dividends from FTSE 100 index since 1996. Source: InvestEngine
***Ts&Cs apply, minimum investment £100