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NERVOUS SAVERS MAY MISS OUT ON EQUITIES

Despite world stock market crises, share-based investments should do better long term

Wednesday March 26,2008

By Holly Thomas

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ANXIOUS savers who shun the stock markets and put their hard-earned money into cash accounts are missing out on higher potential returns.

A report from Virgin Money says cash Isas (individual savings accounts) are being opened at the rate of three to one against equity accounts.

Savers are being scared off by stock market volatility in the run up to the end of the tax year.

More than 7million tax-free cash Isas have been opened in the past 12 months, compared with 2.5million equity accounts, despite the fact that savers can put more money into equity Isas and that stock market investments historically produce better returns.

The report shows that, while the FTSE All Share index was down 6.16 per cent in the year to March 10, 2008, during the past three years it grew 28 per cent and over five years it has increased 94 per cent.

“The poor performance by stocks and shares in the past 12 months has inevitably pushed investors towards cash Isas,” said Scott Mowbray at Virgin Money.

“But if you took that view five years ago, you would be kicking yourself now because shares have consistently performed well compared to cash.”

Chancellor Alistair Darling confirmed in the Budget that from April 6 savers will be allowed maximum Isa investments of up to £7,200 in a financial year, compared with £7,000 now.

The cash Isa limit will rise to £3,600 from £3,000.

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IT IS NOT THE WHOLE TRUTH

28.03.08, 10:26am

Selective dates give totoally different results.
I have a VIRGIN PEP. From 1998 to 2008 ..That is 10 years. The value (all in shares) has grown by 47%.
That is an annual compounding growth of appxoximately 4% per year.
£3000 invested with Virgin PEP in 1998...
1999 = £3200
2000 =£3500
2001 = £3700
2002 = £3100 After 4 years LOSS
2003 = £2180 After 5years BIG LOSS
2004 - £2800 After 6 years LOSS
2005 = £3200 After 7 years 6.7% growth !!!!!!
2006 = £4000 After 8 years 33% growth
2007 = £4500 after 9 years 50% growth
2008 = £4400 After 10 years 47% growth
Shares are risky and yet over 10 years return less than a building society. or a cash ISA

Stock market is for the dealers who take a percentage of OTHER PEOPLES MONEY.
Gambling is for Bokmakers not Punters.
CHECK THE FIGURES, DON'T BE DAZZLED BY TEMPTING DREAMS DANGLED BEFORE YOUR EYES.
Am I lucky that I still have some savings?
I was not a shareholder in Northern Rock..that was luck.