Equity ISAs not as popular as cash ones

Over recent years equity ISAs in the UK have prove far more lucrative than cash ISAs, enabling consumers to earn a far higher return on their money.

However, the last year has seen cash ISAs outperform equity ISAs, and with so much volatility in the IK stock markets many consumers are now turning to cash ISAs and steering clear of their equity counterparts.

According to recent reports the sales of cash ISAs have gone way beyond the sale of equity ones, with around 7.38 million cash ISAs sold this tax year compared to 2.49 million equity ones.

This research was carried out by Virgin Money, but the results of a This is Money poll also mirrored this information, with over 84% of readers having invested in a cash ISA compared to just over 22% investing in an equity ISA.

A Virgin Money official stated: ‘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 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.’