Miranda Seath, director for Market Insight & Fund Sectors at the Investment Association, has advised savers to consider stocks and shares ISAs for long-term financial goals and to combat inflation. She highlighted the tax-efficient nature of these accounts, which allow adults to save up to £20,000 per year tax-free.
Seath emphasised the power of compounding, noting that investing early in the tax year can yield greater returns. 'If you invest £1,000 now at the start of the tax year, it can make a bigger difference than investing the same amount just before the end,' she said.
She also illustrated the impact of inflation on cash savings: £10,000 placed in a cash ISA in 2003 would now have the purchasing power of just £8,448, whereas the same amount invested in a global equities fund would be worth £18,140 after inflation.
Seath encouraged new investors to start small, using digital tools and apps that round up everyday purchases to invest the difference. 'Even investing a small amount monthly can make a difference in the long term,' she added.
