April 24, 2014

Fidelity urges savers to look beyond cash accounts

Fidelity has urged savers to look beyond cash savings accounts and broaden their asset classes as cash savings rates continue to prevail at record lows during 2014.

Tom Stevenson, Investment Director at Fidelity, argues that now could be a good time for savers to look to the stock market to make the most of their money.

“When thinking about saving, many of us first assume that cash is the safest option. While this is partly true – you won’t get the ups and downs in cash savings that you might with the stock market, and cash is ‘liquid’ so you can access it when you need it – savers shouldn’t underestimate the risks of leaving their savings in cash accounts alone. Storing your money in cash accounts can result in very limited returns over time.”

Cash vs equities: what savers would have accumulated over a 15Y period (from 31 March 1999 to 31 December 2013)

·         If savers had invested £1,000 in the average high street cash savings account** 15 years ago, they’d now be left with £1,220.46.

·         If savers had invested £1,000 in the FTSE All Share 15 years ago, they’d now be left with £2,009.13.

“These figures show that investing in equities would have earned you more than quadruple the amount compared to saving through cash over the last fifteen years”, says Stevenson. “For most savers, that will be too big a discrepancy to ignore”.

Statistics are provided via Fidelity and Morningstar sources.

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