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Cash Is King: Most People Still Keep Savings In Cash Despite Falling Returns

Friday, 27 November 2020
  • Nearly half (44%) of savers still save in cash accounts despite rock-bottom interest rates
  • Analysis from EQ shows that sticking to cash accounts may be losing savers hundreds of pounds over a five-year term
  • Sharesave schemes grow in popularity for savers looking for low-risk ways to invest

With a Bank of England base rate of 0.1% and few savings accounts offering more than 1% interest, it might be safe to assume that savvy savers are looking around for the best way to make their money work for them.

However, new research from EQ (Equiniti Group plc), an international technology-led services and payments specialist, shows that this is not the case. Nearly half (44%) of savers rely on personal cash savings accounts, and one third (30%) use cash ISAs. A mere one-in-eight (12%) save into a stocks and shares ISA.

Analysis from EQ shows that this reluctance to depart from the familiar comes at a high price: savers who stick to cash accounts are likely losing out on hundreds of pounds of profit. Over the past 5 years a top selling FTSE 100 tracker has returned a 3.9% annual growth rate, even allowing for the impact COVID-19 has had on the markets. Compared to the best 5-year savings rate available in 2015 (2.35%), if a saver had invested £100 per calendar month, the tracker investor would be £180 better off, even after fund fees and this year’s market crash. Saving at today’s best available rate of 1.5%, would leave the cash saver £395 worse off.

Sharesave schemes (tax advantaged Save As You Earn schemes) are also a popular form of low risk investment. These schemes are low risk because savers can choose not to take up the investment if the value when the scheme matures is lower than the amount they have put in - in that case the saver is left with the cash value of their original savings. However, recent analysis from HRMC1 shows that employees exercised Sharesave options worth £420 million in the 2018/19 tax year – an average profit of £3,818 per person.

Jennifer Rudman, Industry Director at EQ, commented: “While financial prudence is certainly a virtue and caution should always be exercised before investing, these figures suggest that savers who stick to what they know may be disadvantaged from not looking further.

“For many, the choices available become a major obstacle to investing. Our research has shown that many savers find Sharesave schemes often present a low-risk gateway into investing in equities. Anyone who wants to invest in the stock market, but doesn’t know where to start or is worried about making a mistake should check to see whether their employer offers a low-risk, tax efficient Sharesave scheme.

“Since March we have seen both participation and contribution rates rise for a number of new Sharesave schemes launched by clients, with many employees looking to take advantage of the recent market slump in share prices with corresponding low Sharesave option prices.”


Note: Research conducted for EQ by YouGov between 11th-14th September 2020; base of 2008 UK adults who save £100 or more in their bank account each month

1. HMRC, Employee share schemes statistics

For more information:

Tulchan Communications

Martin Robinson
Tel: +44(0)20 7353 4200

Notes to Editor:

About EQ (Equiniti Group plc)

EQ is an international technology-led services and payments specialist. With over 5,000 employees, it supports 36 million people in 120 countries and serves c.70% of the FTSE 100. EQ’s purpose is to care for every customer and simplify every transaction, delivered with less of an impact on the environment.

EQ is listed on the London Stock Exchange as Equiniti Group plc.

Find out more

EQ serves clients and customers through four divisions:

EQ Boardroom: Share registration, governance and investor relations advisory, and employee benefits services

EQ Digital: Helping regulated businesses and Government to manage customers through innovative digital solutions

EQ Paymaster: Pensions, annuities, flexible benefits and payroll for the UK’s largest public and private sector organisations

EQ U.S.: Transfer agency, equity compensation services and digital solutions for U.S. firms; serving the world's leading brands since 1929