17 Jun 2025

Are Savers Missing Out by Playing It Safe?

New analysis reveals that UK savers may be leaving significant returns on the table by favouring cash over investment markets. While interest rates remain relatively high, returns on cash have fallen far short of those generated by global equities in 2024.

From January through September, average interest on UK savings accounts was 2.93%, amounting to £58.6 billion in income. In contrast, major stock indices outperformed substantially—FTSE All-Share delivered a 9.9% total return, and the MSCI World surged by 13.4%.

Over the long term, the gap becomes even more pronounced. In real terms, global equities have multiplied sevenfold over the past three decades, while cash savings have consistently lagged behind inflation by an average of 3.4% per year.

Despite this, cash holdings continue to grow—UK savers have added £51 billion to their balances so far this year, bringing total cash deposits to £2.05 trillion. Notably, most of this has gone into instant-access accounts, where interest rates are now trending downward.

The preference for cash appears rooted in perception rather than performance. A recent survey showed 44% of respondents consider cash the best option for long-term savings. Even when considering inflation, more people trusted cash to preserve value than stocks—despite historical data suggesting otherwise.

These findings point to a persistent misunderstanding of investment risk and return. For long-term savers, rethinking the role of cash in their portfolios may be increasingly important.