Savers lost £90bn by not investing

SAVERS have missed out on at least £90billion by keeping money in savings accounts rather than investing in shares, a leading think tank has said.

The Social Market Foundation has warned that low rates and rising inflation means that savers are losing money by keeping it in cash accounts. Its report, entitled Saving Better, warns that risk-averse savers could be devaluing their money by trying to keep it safe in lowrisk bank accounts instead of investing in the stock market.

It suggests all 15-year-olds should be encouraged to invest by being given £1,500, of which they must invest at least 50 per cent in non-cash assets, such as the stock market or peer-to-peer lenders, which allow consumers to lend directly to borrowers at an agreed rate.

This should be funded by reducing the Isa allowance, which recently increased from £15,240 to £20,000, a change which the report said “may incentivise poor saving behaviour”.

It also suggested allowing ordinary savers to invest in the economy by establishing Government-backed “Britannia Bonds” which would be used to fund infrastructure and housing. The report said the Government needed to take “radical action to end cash bias and create an asset owning democracy where all households have a stake in the economy.”