Cash ISAs have proved very popular since they were introduced to encourage people to save money by not taxing any interest earned. They have always provided a safe nest egg but since the financial crash of 2008 record low interest rates have meant that cash ISA savers have been really losing out on their financial returns.
The fact that there is no longer any tax to pay on the first £1,000 of annual interest has been of little comfort to cash ISA savers, who have seen the value of their money depreciate year on year. Interest rates are likely to remain relatively low for a long time to come and,with inflation rising, many savers are looking elsewhere to invest their money to ensure a decent return for their retirement.
Geoff Newman, Development Director of Lyndhurst Financial Management, a leading Hertfordshire based financial planning and financial advice firm says
“We help our clients make better financial decisions and this is extremely important when planning for retirement. Although some people are reluctant to invest in stocks and shares, the average dividend yield of the FTSE All Share has been 3.42% between 1995 and 2015.
While investors could experience capital losses in the unpredictable marketplace, as retirement planning tends to involve long term activity it’s likely that over a period of time the markets will rally and the value of someone’s investments will still be greater than if they’d left their cash in a typically low return ISA.
Before making any decisions we always advise people to seek professional financial advice so that they can make the right decisions for their financial future and retirement.”