The Landscape of Cash ISAs
Cash ISAs are a popular choice when people first begin to save, they are easily accessible, protected, not liable to capital risk and low cost. Many saver’s however are missing out on greater potential returns.
Many Cash Savers don’t:
- Search the market for a more competitive rate
- Don’t know the rate they are currently getting
- Realise they may be getting a lower rate than new savers
- Understand how inflation is affecting their savings
There were times when cash savings were providing real rates of return (a return greater than inflation) however the current average ISA rate is 0.46% and RPI ( a measure of inflation) is currently 2.5% this means the real value of your savings (what the amount can now buy) is decreasing.
For people who will need the funds in the short term (under 5 years) or are not comfortable with the value of their savings fluctuating then cash is king. For investors with a longer horizon however they are potentially missing out on one of the most important aspects of long term savings which is beating inflation and ensuring the money you have put away is worth at least what you save when you come to use it.
Before investing however you need to ensure you fully understand the level of risk you are taking and ensure it suits your circumstances.
