Isa savers go for cash rather than equity

More and more people are putting money into cash Isas instead of equity Isas as uncertainty in the world’s financial markets continues.

According to research by Virgin Money, three times as many cash Isas have been opened this tax year as equity Isas, even though the latter can offer higher returns over time.

The shift has been blamed on the ongoing crisis in the global money markets, with cash seen as the lower risk option.

In the 2007/08 tax year, 7.4 million cash Isas have been set up compared with just 2.5 million equity Isas.

Although savers can invest larger sums in stocks and shares Isas, some £22.6 billion has nevertheless poured into the safer cash accounts.

Scott Mowbray of Virgin Money said: “The poor performance by stocks and shares in the past 12 months has inevitably pushed investors towards cash Isas. But going for the safety of cash is potentially risky if it means missing out on long-term gains.”