Almost every ISA millionaire in the UK built up their pot through a stocks & shares ISA, analysis of HMRC data shows.
A freedom of information request submitted by wealth manager Murphy Wealth found that nearly 94% of the 4,850 individuals with £1m or more in their ISAs had stocks & shares accounts, while just 6% used a combination of stocks & shares and cash.
Adrian Murphy, chief executive officer of Murphy Wealth, said: “Almost all ISA millionaires have built their wealth by holding stocks and shares – and no one has got to that status holding cash alone. It only serves to underline why more people in the UK should consider investing their money.”
However, cash ISAs have continued to outpace their stock market counterparts in terms of popularity. Data from the HMRC in September found that more than 2 million people subscribed to a cash ISA in the 2023-2024 tax year, while just 283,000 opened a stocks & shares ISA.
Murphy attributed this to the “popular perception” that the stock market is too risky, while holding cash is the safest option.
But he warned that despite interest rates on cash being “optically high” in recent years, historically a portfolio of stocks and shares “has delivered far higher returns over most reasonable timeframes”.
Indeed, according to research from AJ Bell earlier this year, savers who stuck entirely to cash ISAs could have missed out on more than £50,000 by not investing.
These findings follow rumours that chancellor Rachel Reeves is considering cutting the annual cash ISA allowance in the upcoming Budget.
“Using your ISA annual subscription to save cash is a waste of the allowance – and the figures we have uncovered from HMRC demonstrate why the chancellor is right to look at reforming ISAs in a way that better incentivises investment,” Murphy concluded.
The figures relate to ISAs with £1m or more during the 2021/22 tax year, which is the latest available HMRC data.