Savers are turning away from cash ISAs, data from HM Revenue & Customs (HMRC) suggests, with its latest figures revealing a drop in new accounts.
There were 697,000 fewer cash ISA accounts opened in the 2017/2018 tax year compared with 2016/2017.
However, the amounts subscribed increased by £610m over the same period to £39.8bn.
In contrast, there were record flows into stocks & shares ISAs – up £6.38bn from the 2016/2017 tax year to £28.7 billion in the 2018/2019 tax year.
Total adult ISA funds rose to a record level of £608bn.
ISAs are a popular way of getting saving. Everyone gets an allowance each tax year, currently £20,000, that can be saved in a cash ISA or invested in a stocks and shares ISA tax-free.
There are plenty of factors when choosing which is most suitable.
A cash ISA will pay you a fixed rate of interest but you want to ensure you are at least beating the rate of inflation so you get a return above the cost of living.
Many cash ISAs struggle to beat inflation.
An alternative route can be a stocks and shares ISA. This puts your money in the stockmarket, which can have higher returns than a cash ISA but there is also a risk that the funds or shares your money goes into decline in value and you could lose what you invest.
HMRC’s stats suggests savers may be getting fed up with the poor returns of cash ISAs, but before delving into the stockmarket it is important to get advice so your money is going into the most suitable funds for you.
A financial adviser can help build a stocks and shares ISA that meets your needs and goals and to ensure you ISA allowance is used efficiently.
An ISA is a medium to long term investment, which aims to increase the value of the money you invest for growth or income or both. The value of your investments and any income from them can fall as well as rise. You may not get back the amount you invested.