“Isa subscriptions were down overall in the last tax year, which on the face of it seems disappointing. But the good news is that savers are punishing the low rates on cash offered by banks and building societies, and taking advantage of the opportunity to invest their Isa savings in the stock market. The number of people putting money into stocks and shares Isas increased by nearly a quarter of a million last year. Although cash Isas are still dominant, their share of all Isa subscriptions fell to 72% as a result.
“And there is still a big divide between certain groups, with men still more likely to save into stocks and shares and lower income households much more likely to favour a cash Isa.
“Although subscription numbers declined slightly, the amount saved actually increased on aggregate because, on average, the typical stocks and shares Isa investor is putting more money into their account. The average amount paid into an Isa increased by 15% to nearly £6,500, although this still means the average Isa holder has around £13,500 of unused Isa allowance each year.
“Over time, compound returns can deliver rewards for investors that commit to saving through a stocks and shares Isa, and this is growing more appealing as the prolonged low interest rate environment means that returns on cash continue to be meagre.
“The Isa, now 20 years old, has been enormously successful. By exempting individuals from tax on interest, dividends and capital gains, it has created a fantastic incentive to save and invest, and individuals continue to take advantage of that in order to invest in their own future and set money aside for their family.
“For anyone considering investing in an Isa, there are lots of options available and it is well worth considering speaking to a financial adviser. They will assess your own personal financial needs and help to identify an investment plan that sets aside the right amount and allocates it to an investment that is suited to you.”