Stocks And Shares ISA Vs Cash ISA | will never contact you by phone to sell you any financial product. Any calls like this are not from Moneyfacts. Emails sent by will always be from Be Scamsmart.

ARCHIVED ARTICLE This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Derin Clark

Derin Clark

Online Reporter
Published: 29/03/2021
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With just a week left for savers to use up the 2020/21 ISA allowance, time is running out for savers to make the most of their £20,000 tax-free limit.

Many savers will have been disappointed that there has been no ISA season this year, with few providers increasing rates or launching chart-topping products – as such, cash ISA rates have remained low and savers may be considering alternative options to boost the returns they make on their deposits. One option could be a stocks and shares ISA.

Research carried out by has found that, while cash ISA rates have remained low over the past 12 months, the average stocks and shares ISA performance has bounced back in the period between March 2020 to March 2021, compared to the 2019/20 tax year.

In fact, as the table below shows, the average stocks and shares ISA returned 13.55% between 1 March 2020 and 1 March 2021, a stark contrast to the 2019/20 tax year of -13.3%, which was the worst performance year seen since 2008/09 tax year of -20.3%.

Meanwhile, our research has found that the average ISA rate during March 2020 to March 2021 was just 0.63%, which compares to an average ISA rate of 1.18% in the period April 2019 to April 2020.


Average stocks & shares ISA performance
March 2020 to March 2021 % growth
Average stocks & shares ISA 13.55%
Best-performing stocks & shares ISA fund sector 57.3% (Technology & Telecoms)
Worst-performing stocks & shares ISA fund sector -7.42% (Global Emerging Markets Bond - Hard Currency)
2019/20 tax year % growth
Average stocks & shares ISA -13.3%
Best-performing stocks & shares ISA fund sector 12.2% (UK Gilts)
Worst-performing stocks & shares ISA fund sector -26.9% (UK Equity Income)
Average cash ISA rate
Mar 2020 to Mar 2021 0.63%
April 2019 to April 2020 1.18%


“This year’s performance across stocks & shares ISAs is in clear contrast to the 2019/20 tax year, when on average over that period there was a loss of -13.3%,” explained Rachel Springall, finance expert at “Not only was this beaten by the average cash ISA rate over the equivalent period at 1.18% but the performance was the worst seen since the financial crash. The stock market has since bounced back, with the average stocks & shares ISA returning 13.55%. However, the cash savings market has been devastated over the same period and now the average cash ISA rate has reduced over the past year to a record low of 0.63%.

“Savers who are still debating what ISA to choose and who may be risk-averse could still turn to a cash ISA but it’s clear to see why some may change their mindset and opt for a stocks & shares ISA instead. However, it is important that savers understand that past performance is not guaranteed for the future, so seeking advice and assessing their level of risk would be wise.”

Risks of a stocks and shares ISA

Although there is the potential to gain a higher return on investments with a stocks and shares ISA compared to a cash ISA, these ISAs also have a higher risk. Money deposited into a stocks and shares ISA is invested, which means that investors risk not making any returns on their investments at all and, in some cases, could lose their initial capital as well. As Springall warns: “According to a recent study by the Financial Conduct Authority (FCA), a significant loss could have a fundamental lifestyle impact on 59% of DIY investors who have less than three years' experience of investing.”

With a cash ISA, however, the money deposited is guaranteed along with the interest made.

For those looking to save for a short period of time, for example five years or less, or who cannot risk their money, a cash ISA may be the better option. However, for those who are willing to take the risk and who are planning to invest in the long-term, a stocks and shares ISA could be worth considering.

Due to the financial risks involved with a stocks and shares ISA, it is normally a good idea to speak to an independent financial adviser before investing.

How to invest in a stocks and shares ISA

The growth in investment platforms has made it easier for consumers to invest in stocks and shares ISAs and many platforms only require a small amount of initial capital to set up an investment. For those considering investing in a stocks and shares ISA, more information about investment platforms can be found here. Alternatively, visit our stocks and shares ISA chart to see what stocks and shares ISAs are currently available.

Featured: stocks and shares ISA providers

Provider Min monthly investment Number of funds available  
Healthy Investment

Find out more
Interactive Investor
3,000 plus Find out more
Foresters Friendly Society £500
Find out more



Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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