ONS official saving data June 2022

The report highlights the shift from cash ISAs to stocks and shares ISAs, as savers try and offset the negative effects of inflation. Saving rates on cash ISAs for many long-term savers are very unattractive given current inflation trends and it is little surprise that savers look to the investment markets to secure higher long-term returns . ISAs remain an important, tax efficient method of saving for the future and a well diversified stocks and shares ISA has proven to generate higher long-term returns than Cash ISAs. It should always be remembered that investing in equities is a savings strategy for the longer term, as stock markets can be volatile in the short-term.

It's great to see the amounts people are putting into Cash ISAs has decreased with people realising that investing in a Stocks & Shares ISA is a much better way to grow and maintain your wealth. Investing and saving were at a high during the pandemic and as people have returned back to normal life, their discretionary spending has increased and therefore the amount invested and saved has decreased. The sensible ones have maintained their monthly or annual contributions and will reap the benefits for many years.

Less money in the family pot, reflected by lower levels of junior and cash ISA savings. As more and more families struggle to pay their daily bills, one of the first things to go is savings, and it appears that yet again the real losers from the economic downturn will be the children with Junior ISA subscriptions down by roughly 6%. We can expect this trend to continue as the cost of living crisis bites this year. In the longer term this will put increased pressure on those from less wealthy backgrounds looking to attend university. Those that are still saving are taking a punt with their savings as stocks and shares ISA savings have increased whilst cash savings are significantly down. Either that or poorer savers are being forced to draw on cash savings whilst the better off take advantage of volatile markets to invest.

The good news for the health of the nation's pocket is that contributions are going up, but the general investment mix is a move away from cash and into the stock market. With inflation beginning to bite, and the real purchasing power of cash reducing, savers are looking to the stock market for more attractive returns to maintain the value of their savings. The bad news is that savers are still not saving enough for their long retirement and this will see workers having to work much longer. The idyllic 3rd act of life, otherwise known as retirement, is still a long way off for many. A double whammy is forming where people are living longer, and not saving enough for potentially 30 years of retirement. When people receive their annual pension forecasts, they must factor in the fact that the figures quoted at their selected retirement is based on today's value and purchasing power. An annual income of £25,000 plus a full state pension of £9627.80 may well seem enough to live comfortably on, but what might £34,627.80 per annum buy you in 30 years? Given inflation is on the rise, investors, as backed up by the latest statistics, are seeking more risky investments in order to maintain the value of their savings. Stock market investment really is a great way of saving for the future but it important to not leap in blindly. When looking at this type of investment there are some important factors to consider. These are timeframe, attitude to risk and charges.

The latest Annual Savings report shows that overall, the surge of saving and investing that we saw during the pandemic is starting to fall back again. Some of this will be down to the rising cost of living, but I'd guess that most of the change comes down to lockdown-free living. Social events, festivals and holidays are returning, so people are making spending choices based on making the most of life. It's good to see an increase in the proportion of ISA contributions moving into stocks and shares, rather than cash. This suggests people are becoming more aware of the need to invest for the long term, in an an effort to offset the ravages of inflation. There will be millions of individual stories behind this data, though. Many will be diving 'Gung Ho' into pre-pandemic spending and making the most of returning freedoms. Others will be embracing a new found sense of purpose in life, investing for their future and retaining some of the good money habits developed during 2020 and 2021.

"Interesting results coming out of this mornings savings data. The move away from Cash ISAs to Stocks & Shares ISAs make sense, but clearly our work is not complete given so much money is still flowing into Cash ISAs for virtually no return. We are seeing a trend of some clients start to focus on paying down mortgages as a more efficient way of using their cash. This is a way of de-risking their overall finances, if/when they need to re-mortgage at a higher rate in the future - plus the gains are tax-free when they sell if it's their main residence."