£1,000 invested in cash and stocks and shares over 18 years - 2 very different outcomes
We definitely need less miserable things in the world at the moment, however unfortunately interest rates on cash savings are SO miserable!
I recently compared cash ISA returns versus stocks and shares and the difference was shocking! If £1,000 were invested for 18 years in a:
Cash ISA at 2.95% = £24,000 total value
Stocks and shares ISA at 8% = £40,000 total value
Difference = £16,000
In the illustration above, I have been generous and found the very top cash Junior ISA rate that I can find (using the Martin Lewis Money Saving Expert website on 03/12/2020) and it is still only 2.95%!
In comparison, I have been pessimistic with an average 8% return for stocks and shares ISAs invested in simple index trackers (my daughter's global index has returned on average 14% over the past 5 years!)
If you invested £1,000 per year, for 18 years the difference between the size of the savings pot is a massive £16,000! This is almost 2 years worth of university education, a car, even a house deposit!
It is worthwhile checking the rate of return that you are getting on any cash savings accounts and strongly considering investing in stocks and shares if you plan to leave the money invested for 3 years or more. Over the long term, stocks and shares will very likely outperform cash and provide a bigger savings pot for your children.