Yes, stocks and shares are in turmoil ... but it really is a good idea to invest

Recent headlines about stock markets in free-fall and graphs with downward arrows are not an ideal backdrop against which to persuade people to move from cash savings into riskier investments.

- Hilary Osborne

But that was what the chancellor, Rachel Reeves, was faced with after announcing that a review of cash and shares Isas was on the way.

A week after her spring statement included confirmation that the government was considering changes to the tax-efficient accounts “to earn better returns for savers, boost the culture of retail investment, and support the growth mission”, Donald Trump put the frighteners on investors with his tariffs announcement.

But while they may have dodged losses linked to recent market gyrations, those who hold only savings accounts have missed out on some serious stock market gains in recent years. Figures issued by the Investment Association at the end of March showed that £10,000 put into a cash Isa five years ago would be worth £8,713 “in today’s money” once inflation was taken into account. By contrast, the same sum put into a stocks and shares Isa that invested in a global equity fund would have been worth £12,249, it said. That figure was issued on 27 March, before the stock market turmoil of the last few days.

Ruth Handcock, the chief executive of the money advice company Octopus Money, says that over most periods, investments have outperformed cash savings.

“The reasons for not investing are not logical,” she says. While everyone needs some cash they can get their hands on in an emergency, “people who only save see the value of their money eroded by inflation”, she adds.