Investment - Articles - The shine has really come off of Cash ISAs

 This could reflect continued low interest rates meaning that cash ISAs almost invariably deliver negative real returns. It could also reflect the introduction in April 2016 of the Personal Savings Allowance which means that most taxpayers no longer have to pay tax on interest income, even on money not held inside an ISA. Previous Royal London research (‘The Curse of Long-Term Cash’ – www.royallondon.com/policy-papers ) highlighted the fact that those who had held their money in cash ISAs over the last decade compared with investing in a range of assets including stocks and shares and bonds had lost out on around £100 billion pounds in returns.

 Commenting on the latest figures, Steve Webb, Director of Policy at Royal London said:“These latest figures show that the shine has really come off cash ISAs. Whilst keeping a small amount of money in cash for emergencies or a rainy day makes good sense, holding large amounts of money in a cash ISA for the long-term can seriously damage your wealth. Low ISA interest rates coupled with rising inflation means that cash ISAs have delivered negative real returns year after year. It is to be hoped that this slump in saving through cash ISAs means that investors have started to realise the risks associated with keeping their money in cash”.