Cautious savers leaving their money in cash would have made three times more if they had invested their earnings instead.

Moneyfacts, a financial data firm, compared the returns on the average cash Isa in the 12 months to February with the returns on the average stocks and shares Isa, as measured by Lipper, which is part of the London Stock Exchange Group.

The average cash Isa returned 3.48 per cent in the 2025-26 tax year, while the average stocks and shares Isa returned 11.22 per cent. It was the second consecutive year that the returns on investing were at least three times greater than returns on cash savings. In 2024-25 stocks and shares Isas returned 11.86 per cent on average, compared with 3.8 per cent on cash Isas.

Rachel Springall from Moneyfacts said: “This should be a wake-up call for those who fear investing, as cash returns have diminished. Cash is considered a safe choice, but investing shows the gains that could be made over the longer term.”

The Times has launched its Smarter with Money campaign with the ambition of creating a million investors. Instead of leaving their money languishing in poorly paying savings accounts, we want more savers to take advantage of the stock market, where returns are historically higher than cash. A poll of 14,352 people by the asset manager Blackrock found that only 32 per cent were investors.

Some £69.5 billion was paid into cash Isas in the 2023-24 tax year, according to HM Revenue & Customs, while only £31.1 billion went into stocks and shares Isas. All investment returns or savings interest in an Isa is tax-free, and savers have a £20,000 annual Isa allowance, which can be used across cash and investment options. From April 2027 the cash Isa allowance for those aged under 65 will go down to £12,000.

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It is important to keep some money to hand as a safety net and returns on cash have improved since the end of 2021 when the Bank of England base rate went up from 0.1 per cent to a high of 5.25 per cent in August 2024. It is now 3.75 per cent. But cash saving is unlikely to significantly grow your money over the long term.

The top rate on an easy-access savings account is 4.5 per cent from JP Morgan’s smartphone bank Chase, while the top easy-access cash Isa pays 4.39 per cent from the savings app Moneybox.

The analysis by Moneyfacts found that while the average investment Isa lost 3.27 per cent in 2022-23 and returned only 2.8 per cent in 2023-24, the average annual return on investing between February 2021 and February 2026 was 5.91 per cent, compared with 2.65 per cent for the average cash Isa.

The MSCI All Country World index, a barometer for the global stock market, has returned 8.78 per cent a year since the end of 1987 and 13.3 per cent over the past ten years.

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Kirsten Pettigrew from the wealth manager Rathbones said: “While past performance is no indicator of future results, a look back at history shows that investing has generally given people a much better chance of strong returns that outstrip inflation and interest on cash savings. Cash plays an important role in providing short‑term security but taking too little risk over the long term can reduce the likelihood of achieving financial goals.

“For investors with time on their side and the ability to tolerate market volatility, equities offer greater long‑term growth potential. Regular contributions, even modest ones, can add up significantly over time thanks to the magic of compounding.”