Are we willing to drop cash Isas and take more risks with our money?

BBC News

19-07-2025

Savers are missing out on financial rewards because the benefits of investing in stocks and shares are being drowned out by risk warnings, the chancellor says.This week Rachel Reeves said savers would be sent details of investment opportunities if they have money in low-interest accounts. And she won't completely rule out cutting the annual tax-free allowance of cash Individual Savings Accounts (Isas) to push people into stocks and shares Isas instead. But what are her chances of making the UK a nation of investors, rather than risk-averse savers?Experts say women are investing less than men, and have warned the chancellor that some of her ideas could backfire and put off potential new investors.
'Pink websites won't work'
Cash savings accounts are steady and safe. The amount of interest varies between account providers, but it is clear how much the returns will be. They are popular when putting money aside for emergencies, or for holidays, a wedding or a car.By contrast, the value of investments in stocks and shares can go up and down, but with risk can come reward. Long-term investments can be lucrative, not only for individuals, but for the economy as a whole.Laura Suter, director of personal finance at investment platform AJ Bell, says Reeves and the finance sector should start by making investing more attractive to women.Having written reports on the Isa gender gap, she argues that, for too long, advertising about investing has been designed by men. Lisa Caplan, director at investment company Charles Stanley, agrees. "It's not about making your website pink. It's about using less jargon, competitive language, and masculine imagery," she says."When clients who are women feel seen and understood, they will be more willing to trust their money to an adviser or even an investment platform. I think this is beginning to change."
Jema Arnold is an investor, and works for UK shareholders' association ShareSoc. She wants investing to be part of general, honest conversation among friends, not private and hidden. "I go to a book club. I want investing to be like that," she says.She is joined in a London cafe by Laura Colucci, who is in her 40s, and Wendy Lanham, who is 71. All three are divorcees, who were forced to think about their relationships with money when their marriages ended.Mrs Arnold was with an investment banker for 17 years. "In many ways I was a traditional housewife," she says. Her now ex-wife had managed that side of the finances."I'd switched off that part of my brain when raising a daughter. That was a mistake. I felt foolish. I had to switch it back on again fairly quickly."Mrs Colucci was the same. "There were investments in my name," she says. "It was a huge learning curve in one year, when I had to take control."Mrs Lanham put her money into savings accounts. Only later did she consider moving some into investments.But that was a path that all three initially found difficult to join."People froze up and looked awkward when I talked about investing," says Mrs Arnold.
Male domination
Mrs Lanham says she joined a group which met to talk about investing. The membership was entirely male. "I bought myself a book called Investing for Idiots, went to a conference, and treated it like adult education," she says. "I did not know anything, but hung in there, and the organisation changed."Now, the trio are members of SIGnet – a network of investor groups that meet in different parts of the UK, or online. It is not-for-profit and covers different areas of interest. It has lots of female members.But they say the chancellor will have little hope of getting more people to invest without initially improving their understanding, especially if they are trying it for the first time."There's no point telling people to go and run a marathon when they've never run before," says Mrs Colucci.
Reeves told financial services and business bosses in her Mansion House speech this week that the "negative" narrative around savers investing money in stocks and shares needed to change."For too long, we have presented investment in too negative a light, quick to warn people of the risks without giving proper weight to the benefits," she said.She announced new adverts, reminiscent of the "Tell Sid" campaign of the 1980s, which encouraged people to invest in the newly privatised British Gas.Targeted messages will also be sent by banks to people who have money in low-interest accounts.Mrs Suter, from AJ Bell, says this needs to go beyond a "token effort"."If it can get widespread coverage and enthusiasm, then it could make a difference," she says.
Isa debate
Carol Knight, chief executive of the Investing and Saving Alliance, says Reeves' ambition will be judged a success if more women, more people from ethnic minorities, and more people outside of London become investors. But Anna Bowes, savings expert at the Private Office, says the chancellor risks her plan backfiring by encouraging people to invest now when markets are jittery due to global uncertainty. That could lead to short-term losses."This needs to be done very carefully or it could put off a generation of investors."And she stresses that forcing people to consider a stocks and shares Isa by reducing the amount that could be put tax-free into a cash Isa would be a huge mistake.
Reeves has stepped back from immediately cutting the tax-free limit on cash Isas, following a backlash from banks and building societies.But she is still keen to shift some of the £300bn in these accounts to being invested in the UK and its companies, despite "differing views on the right approach".Any changes would have an impact on millions of people. Isas are incredibly popular - about 42% of UK adults have at least one.Stocks and shares Isas are less popular but more money is held in them overall - around £431bn, compared to £294bn in cash Isas.People with Isas are more likely to be older, with estimates suggesting about half of pensioners have one. And while more women have Isas overall, more men have the investment option, with women more likely to stick to the safety of cash.Many investment companies that sell stocks and shares Isas back a change, while banks and building societies who dominate the cash Isa market are against it.That debate is likely to pick up again as the chancellor's autumn Budget gets closer.