The case for cash – not
A timely reminder from stepstoinvesting. com on how millions of households are missing out on some £31 billion, earning the lowest interest income in 20 years due to rock bottom rates on bank deposits.
Households had £1.32 trillion saved in cash, spread across cash ISAS, savings accounts and current accounts – but earned a record low £4.6 billion in interest. Even if families set aside an emergency fund equivalent to three months of income – approximately £340bn of the total held in cash – this still leaves £963bn sitting unproductively in cash accounts.
If this had been invested in UK equities last year, savers would have earned £34.8bn in dividend income, instead of a paltry £3.4bn in interest. Households would be naturally reluctant to put all of this surplus into equity funds. But a modest regular monthly savings plan would be well worth considering.