Stocks & Shares Isas Outstrip Cash Counterparts
According to government figures, the accumulated value of stocks and share Isas has exceeded the value of cash Isas.
The provisional figures for 2009-10 show that the amount of funds in stocks and shares Isas were worth 178bn, while the total in cash Isas stood at 172bn. The number of stocks and shares ISA accounts rose from 2,960 to 3,017 in the 12 months to 5 April.
This marks a 53% increase in the value of stocks and share Isas which reflects last year's rise in stock markets.
The total value of savings held in cash Isas, which currently pay an average rate of just 0.69%, rose by 9%.Throughout the last financial year, cash Isas were offering even lower returns to investors, with rates of just under 0.5% a year.
Many of the cash Isas on today's savings market offer attractive bonus rates that significantly reduce after the introductory period expires, leaving many accounts paying measly returns. Those that want to keep their rates high need to stay on top of their Isas and be ready to transfer their funds elsewhere if required.
Around a third of the UK's adult population currently have a cash Isa.
As Isa season approached this year, savers were given a boost in the amount of money that can be invested into Isas, with the Isa allowance increasing In April from 7,200 to 10,200, of which half can be saved in cash and half, or the full amount, in stocks and shares.
The figures taken for the stocks and shares investments include the value of former personal equity plans.
Stocks & shares Isas offer the potential to provide much higher returns than their cash counterparts, but this type of account does come with risk, as with any stocks and shares trading, so investors must be prepared to take a gamble.
Those that would sleep easier at night knowing that their funds guarantee a return and are risk free may be interested in locking their savings away in a fixed rate Isa.
Much like fixed rate bonds, these accounts require savers to leave their funds untouched for a fixed period of time, while offering a better interest rate in return.
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