Martin Lewis, the consumer finance expert, has warned that many savers are missing out on significantly better returns by sticking to cash savings rather than investing. Speaking on his BBC podcast, he highlighted a common mistake when setting money aside, particularly for children's future.
A new mother had written in asking which stocks and shares to choose for a junior ISA for her newborn son, so he could access the funds at 18. Lewis noted that most visitors to his website's junior ISA page are looking for top cash savings rates, not investments. He expressed concern that the vast majority of questions focus on savings rather than investments.
Lewis explained that over the long term, investments tend to grow significantly faster than savings. Using historical data from the decade ending 2025, he showed that £1,000 placed in a top savings account would have grown by £270, but needed £390 just to keep pace with inflation. In contrast, a global tracker fund would have generated £1,980, and an S&P 500 tracker £3,790 – an extra £3,520 over cash.
However, he cautioned that past performance is not a guide to future returns and that investments can fall as well as rise. He stressed the importance of a long-term perspective, recommending that money for investments should not be needed for at least five years to allow time for growth and to ride out market fluctuations.
Lewis concluded that junior ISAs are particularly suitable for stocks and shares because the funds are locked away for many years, giving investments time to mature.
