Savers plough cash into stocks and shares ISAs

BUSINESS is booming for investment platforms as savers who stored up extra cash over lockdown flocked to the markets to put it to work.

Investors piled into stocks and shares ISAs in the three months to June, to take advantage of a stock market rebound, and shunned rockbottom savings rates.

During lockdown many workers who held on to their job suddenly found themselves with much more spare money as they cut down on travel and meals out.

British households were holding on to a record 29.1pc of their disposable income in the second quarter of the year, according to official figures.

More savers tried their luck on the markets with tax-efficient stocks and shares ISAs – Individual Savings Accounts – which allow savers to put in £20,000 per year, buy into funds or individual stocks, and reap any returns tax-free.

The total value of new investments in these ISAs shot up 71pc between April and June, compared to the previous three months, according to Scottish Friendly’s new investor index. And it wasn’t just seasoned investors putting more in, as the number of new stocks and shares ISAs being opened climbed by 40pc.

Kevin Brown, savings specialist at Scottish Friendly, said: ‘ Generally, spending opportunities have been limited. This has led to an increase in capacity to save, as official data shows, which has resulted in a rush of new investors to stocks and shares ISAs.’

Households are faced with few options if they want to make a return on money they have squirrelled away. The average easy access savings account will give a return of just 0.23pc and the average easy-access cash ISA offers 0.35pc, says Moneyfacts.

In comparison, the FTSE 100 index of Britain’s leading companies has jumped more than 18pc since March.