Real Cash ISA returns lowest in a decade

By TP Financial Solutions

07 Apr 2022

finances.jpg

Rampant inflation and record-low interest rates have pushed the real returns on cash ISAs to the lowest level for more than a decade, according to analysis from Quilter.

With CPI inflation hitting 6.2% in the 12 months to February 2022, and the monthly interest rates available on cash ISA deposits, including unconditional bonuses, standing at just 0.31%, cash ISA savers face a historic real terms loss of 5.89%.

This is the highest real terms loss on cash ISA savings in over a decade, coming in more than double the previous highest loss (-2.81% in November 2017).

Source: ONS, Bank of England, Quilter

And worse is yet to come, with the Bank of England forecasting that inflation will increase to around 8% in the second quarter of 2022, and perhaps reach even higher later this year. 

Quilter is warning cash ISA savers to mind the gap, and consider a stocks and shares ISA in the new tax year if they are able to lock the money away for a few years, given stocks and shares have a better chance of keeping pace with inflation.

Someone who invested £10,000 in a cash ISA in January 2011 would currently have £11,269. Adjusted for inflation, this is just £8,962. In contrast, a £10,000 investment in the IA Global Equity index over the same period would be worth £27,124 or £21,583 after inflation.

According to the latest HMRC data available, 13 million adult ISAs were subscribed to in 2019/20, of which three quarters were cash ISAs.

Rosie Hooper, chartered financial planner at Quilter, commented: “With inflation hitting lofty heights and set to rise even further, cash ISA savers will be getting less and less bang for their buck in the months and years ahead.

“Cash ISAs have, for a long time, been an easy way to save money with comparatively little risk. But now with inflation hitting 30-year highs and interest rates on cash savings remaining low, the time may have come for people to consider alternatives. 

“If you won’t be needing the money in the next few years, investing could help make your cash work harder, and has a better chance of delivering an above-inflation level of return.

“A good rule of thumb is to save six months of your salary in cash and then invest in a spread of different assets that can deliver a long-term return. But everyone’s circumstances are different, which is why it’s important to seek your own individual financial advice.” 

Rosie’s tips for getting started with investing:

Diversify, diversify, diversify: The first rule of investing is to diversify your portfolio to reduce the risk. For example, by buying a range of shares and having a diverse asset allocation including bonds, property and alternatives. Understand what you are investing in: The investment universe is enormous and growing at a rapid rate. It is important to know exactly what you are buying, what the return drivers are and what the risks are. Have a realistic plan: Investing is a marathon, not a sprint. You need to know how much you can realistically set aside each month to invest, understand your capacity for loss, and get exposure to a suitable amount of risk given your investment objectives. Beware of social media money ‘mentors’: When people want to invest, they often turn to social media for tips. But anyone can set up a profile and start offering advice so be careful who you trust. If you are unsure and want an expert to guide you through, stick to regulated and trusted financial advice. Remind yourself of scam red flags: Investment scams facilitated online and on social media are becoming more and more prevalent. Be wary of an investment proposition that offers an unrealistic rate of return, which downplays the risks or puts you under time pressure to make a decision. If in doubt, check the FCA’s register and make sure you a dealing with a regulated financial services firm. For more information visit https://www.fca.org.uk/scamsmart.

If you would like to discuss your Cash ISA, or any other investments: www.tpfinancialsolutions.co.uk/investments

Latest news

1

Beever and Struthers advise on £1.5bn funding for 2,000 new social homes a year John Jones

Beever and Struthers advise on £1.5bn funding for 2,000 new social homes a year

03 Jul 2025

2

Airframe Designs aligns with US programme for additive manufacturing growth Additive manufacturing technology unit At Airframe Designs

Airframe Designs aligns with US programme for additive manufacturing growth

03 Jul 2025

3

Panache Cruises on course for further growth with support from Rosebud James Cole

Panache Cruises on course for further growth with support from Rosebud

03 Jul 2025

4

Lancashire emerges as key player in UK's Defence and Tech Sector Mo Isap Chair Of The Lancashire Business Board Nick Miles National Cyber Force Deputy Director For Samlesbury Annette Weekes Representative Of The NWRDSC

Lancashire emerges as key player in UK's Defence and Tech Sector

03 Jul 2025

5

Report shows impact of BAE Systems in Lancashire BAE Systems Radar

Report shows impact of BAE Systems in Lancashire

02 Jul 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV123 July/August Launch Event
Lancashire Business View magazine launch
Networking
16 Jul 2025

LBV123 July/August Launch Event

Burnley

08:30 - 10:30

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

The Marketing Metrics that Matter – July 4
LBV Hub Seminars
04 Jul 2025 - 04 Jul 2025

The Marketing Metrics that Matter – July 4

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

08:30 - 11:00

Tri-Site Survey Equipment Showcase
unnamed (2).jpg.jpg
LBV Hub Seminars
09 Jul 2025 - 09 Jul 2025

Tri-Site Survey Equipment Showcase

Crow Wood Hotel, Burnley, BB12 0RT

09:30 - 16:00

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers
Champagne-Jewellery 10 07 25_page-0001.jpg.jpg
LBV Hub Awards
10 Jul 2025 - 10 Jul 2025

Blackburn Cathedral hosts Champagne and Diamonds Event with Ainsworth Jewellers

Blackburn Cathedral, Blackburn, BB1 5AA

18:00 - 20:30

Choose Chorley for Business - Talent Reimagined Business Breakfast
talentreimaginedbb.png.png
LBV Hub Seminars
10 Jul 2025 - 10 Jul 2025

Choose Chorley for Business - Talent Reimagined Business Breakfast

Strawberry Fields Digital Hub, Chorley, PR71PS

08:00 - 10:30

Shaping Preston's future by remembering its past
1750160034867.png.png
LBV Hub Networking
16 Jul 2025 - 16 Jul 2025

Shaping Preston's future by remembering its past

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:30

Chamber Summer BBQ
LBV Hub Social
17 Jul 2025 - 17 Jul 2025

Chamber Summer BBQ

The Borough, Dalton Square, Lancaster, LA1 1PP

17:30 - 20:00

Preston Tech Connection: Web3 is Dead. Or is It?
July Longer Banner.jpg.jpg
LBV Hub Networking
29 Jul 2025 - 29 Jul 2025

Preston Tech Connection: Web3 is Dead. Or is It?

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:30

Preston Freelancer Meet-Up: July
Longer July Banner.jpg.jpg
LBV Hub Networking
31 Jul 2025 - 31 Jul 2025

Preston Freelancer Meet-Up: July

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin