Popularity of cash ISAs rising compared to equity ISAs
April 12, 2008
The volatile state of the UK’ stock markets and financial markets have resulted in the level of consumer interest in cash ISAs soaring compare to equity ISAs, as an increasing number of investors try and avoid taking any major risks with their money. The past year has seen a significantly higher number of cash ISAs opened compare to equity ISAs, with around 7.38 million cash ISAs being opened, compared with just 2.49 million mini and maxi equity ISAs.
The research into the popularity of the different types of ISA was carried out by Virgin Money, and seems to indicate that consumers are still very wary when it comes to the financial markets and stock markets, despite the fact that equity ISAs had outperformed cash ISAs for a number of years prior to last year, when cash ISAs outperformed equity ISAs. A recent poll carried out by This is Money showed that only 22.9% of its readers had opened an equity ISA, whereas 84.9% had opened an cash ISA.
One official from Virgin Money said: ‘The poor performance by stocks and shares in the past 12 months has inevitably pushed investors towards cash Isas. But if you took that view five years ago, you’d be kicking yourself now as shares have consistently performed well next to cash.’
He also added: ‘Going for the safety of cash is potentially risky if it means missing out on long-term gains. All the evidence is that shares provide stronger returns in the long-run than cash.’
He added that in the past equity ISAs have provided a significantly higher return on the customer’s investment compared to the cash ISA, even though the cash ISA did perform significantly better than the equity ISA last year.
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