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HMRC: Fall in number of stocks and shares ISA investors: "The culture of investing in the UK is broken"

ended 04. December 2024

HMRC has just published a report on the amount of savings held in ISAs, LISAs and Child Trust Funds. It says that around 12.4 million Adult ISA accounts were subscribed to in 2022 to 2023, up from 11.8 million in 2021 to 2022. Similarly, the number of cash ISAs subscribed to increased by 722,000. As a result, the share of accounts subscribed to in cash has risen to 63.2%, a 2.5% growth from 2021 to 2022. Meanwhile, the number subscribing to stocks and shares ISAs decreased by around 126,000. Newspage asked IFas and investment experts for their views, below.

7 responses from the Newspage community

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Anita WrightVerified
Chartered Financial Planner at Ribble Wealth Management
The growth in cash ISAs can be attributed to several economic and behavioural factors. Over the past couple of years, the Bank of England has significantly raised interest rates to combat inflation. As a result, cash savings, including cash ISAs, have become more appealing due to their now higher returns compared to previous years. Savers who were previously discouraged by low interest rates may now favour cash ISAs for their perceived safety and improved yields. At the same time, persistent stock market volatility—driven by geopolitical tensions and concerns over a global economic slowdown—has made some investors wary of stocks and shares ISAs. It’s worth noting that S&S ISA providers offer cash fund options. This flexibility allows investors to park a proportion of thier money in a cash-like investment while retaining the ability to reallocate to equities when markets stabilise. For those uncertain about equity market performance, this option can serve as a bridge strategy.
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Wes WilkesVerified
CEO at IronMarket Wealth
The rise in cash ISA subscriptions versus a fall in stocks and shares ISAs is indicative of two things. One is that we've seen 'actual' interest rates during this period for the first time in over 10 years and, second, a real and worrying demonstration of a lack of access to financial advice. It is extremely likely that a proportion of savers are using these cash ISAs as part of their future plans and while 5% will be nice for the couple of years it's fixed for, the rate cliff that will occur once they finish leaves them with significant interest rate risk at a time where the stock market is returing significant double digits above inflation.
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Riz MalikVerified
Independent Financial Adviser at R3 Wealth
The UK is currently facing a significant advice gap. Rising costs driven by stricter regulations have made financial advice inaccessible for many, while the number of advisers in the industry continues to decline. Despite advancements in technology, many people still seek personal guidance and support when making crucial financial decisions. Successive governments have failed to address this issue, leaving countless individuals without access to the guidance they need.
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Gabriel McKeownVerified
Political & Economics Writer at Sad Rabbit - Substack Newsletter
With interest rates at their highest levels in over a decade, the resurgence of cash ISAs signals a paradigm shift in British savings culture, reflecting a broader recalibration of consumer risk tolerance after a period of uncertainty. Ongoing market volatility, driven by geopolitical tensions and inflationary pressures, has led many risk-averse savers to seek refuge in cash. However, while the shift to cash may provide short-term comfort, it raises concerns about the long-term financial resilience of British savers, especially with interest rates on the decline. Over the long term, stocks and shares ISAs have consistently outperformed their cash counterparts, and in this climate of market uncertainty, the importance of balanced, long-term financial planning cannot be overstated. Consequently, without intervention, the nation risks sleepwalking into a future where this short-term thinking exacerbates wealth inequalities for the next generation.
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David BelleVerified
Founder and Trader at Fink Money
The culture of investing in the UK is broken. You're told not to do things constantly. You're told that everything is high risk and you could lose all your money. Or that you don't earn enough to make investing even viable. Risk needs redefining in the UK because we have really lost our way. How many people would even know they can simply invest in the US via a UK stocks and shares ISA? They might just be looking at the return profile of UK PLC and thinking 'what's the point?' Risk and people's approach to it needs to be redefined in this country, but the structure is not set up for it in my view, and that starts at the top.
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Daniel WiltshireVerified
Actuary & IFA at Wiltshire Wealth
Confidence in the UK has hit rock bottom, so is it any wonder people are sticking with cash? The government urgently needs to change the narrative if there is to be any hope of growing the economy.
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Joshua GerstlerVerified
Chartered Financial Planner & Wealth Manager at The Orchard Practice
Hard working Brits are missing out on hundreds of thousands if not millions of pounds by wasting time with Cash ISAs. To grow your wealth over the long term, a Stocks & Shares ISA is a must.