Research carried out by True Potential has been featured in FT Adviser, highlighting the problem of the Savings Gap.
Our survey of 2,000 people found 41% of respondents hadn’t put any money into an ISA in the tax year to February.
And the reason why so many people weren’t contributing? Responders mainly cited poor cash returns. Speaking on this subject, True Potential Managing Partner David Harrison stated, “Not a single cash ISA interest rate clears inflation and the effects of that are clear to see in our research with growing public apathy.”
Our research also found the £1,000 tax-free personal savings allowance on non-ISA accounts, which was introduced in 2016, was a factor in people not contributing to an ISA.
The FT Adviser story highlights our research into the Savings Gap, laying out that “Fifteen per cent of respondents said they contributed less than £1,000 into their ISA, 36 per cent contributed less than £6,000, and 9 per cent contributed between £12,001 and the maximum allowance (currently £15,240 a year).”
Most ISA accounts are in cash, with the FT Adviser article putting the figure at 80% of ISAs being cash based.
To decide between a Cash ISA or a Stocks & Shares ISA, consider what is your financial goal? Are you saving up for something in the short term? In that case, a Cash ISA could be more suited to you. But if you are investing for the long term, you may want to consider a Stocks & Shares ISA. You can manage the level of risk, and could benefit from potentially greater returns. If the companies you own a share in do well, then your return of investment is also likely to do well.
You can read FT Adviser’s full feature here. To play your part in tackling the Savings Gap, make sure you share this article across your social media.
For more on ISAs, read our latest blog update here.
Your capital is at risk. Investments can fluctuate in value and you may not get back the amount you invest. Past performance is not a guide to future performance. Tax rules can change at any time.