The Bank of England is expected to hold interest rates at 0.5% for the 65th month in a row when the announcement is made this week. Our recent consumer attitudes survey has revealed that almost half of the population (48 per cent) still hold all of their savings in cash despite consistently low interest rates.
Since interest rates went down to this record-low level in March 2009, savers have been hard hit – just 11 per cent have moved their investments into stocks and shares where greater value can be achieved, and 8 per cent has chosen to invest in property. These figures rise among women, with 50 per cent choosing to keep all of their savings in cash, and just 7 per cent investing in stocks and shares, compared to 14 per cent of men.
Stocks and shares investments have consistently performed better than cash, however as our research shows, savers still prefer to put their money into cash savings accounts. This means that in almost all cases, the fund cannot keep pace with inflation and so is actually reducing in value.
We need to see a move from saving in cash alone and a greater use of stocks and shares investments, especially as the new ISA means the average family can now shelter £30k per year from the taxman. For this reason, greater education is needed around the different types of savings vehicles available so that people can invest with confidence. Technology can also change the way people save by making investing easier and part of everyday life.