Ten thousand pounds sitting in an easy-access savings account and ten thousand pounds sitting in a global tracker fund are not the same ten thousand pounds — not after five years, and certainly not after ten. Most people choosing between a Cash ISA and a Stocks & Shares ISA treat the decision like a coin toss: pick one, stop thinking about it, hope it works out. The Financial Conduct Authority has flagged for years that a large share of UK savers hold long-term money in cash that would probably grow faster invested, yet the Cash ISA remains the default because it feels safe and the paperwork takes ten minutes.
What does the actual maths say, though? Not the version in a bank's marketing email — the version with real growth rates, real platform fees, and the genuine risk that comes attached to each option.
What each ISA actually promises you
A Cash ISA works exactly like a savings account, except every penny of interest is protected from tax, no matter how large the balance grows. Deposits up to £85,000 per banking institution are protected under the Financial Services Compensation Scheme, and the rate you're paid moves broadly in line with the Bank of England base rate — providers such as Nationwide, Moneybox and Zopa Bank tend to adjust their easy-access ISA rates within weeks of any base rate change. Fix the rate for one, two or five years and you trade flexibility for certainty: useful if you think rates are about to fall, painful if they rise and you're locked in below the market.
A Stocks & Shares ISA holds investments instead of cash — typically funds, investment trusts or individual shares, bought through a platform such as Hargreaves Lansdown, AJ Bell, interactive investor, Vanguard or Trading 212. There's no FSCS protection on the value of your investments (only on cash held temporarily within the account, and only up to £85,000), and the value can fall as well as rise. What you're buying instead is decades of evidence that, over long enough periods, equity markets have outpaced cash savings by a wide margin — not every year, and not without stretches that test your nerve.
Since 6 April 2024, HMRC has allowed savers to pay into more than one ISA of the same type within a single tax year, which quietly removed one of the biggest practical obstacles to splitting money between providers. The overall allowance has stood at £20,000 across all ISA types combined since the 2017/18 tax year, and it resets every April regardless of how much you used the year before.
The ten-year maths on £10,000
Take £10,000 and leave it entirely untouched for ten years in each type of account, using long-run average growth rates of the kind cited in Vanguard and Hargreaves Lansdown's own investor education material — not a forecast, just simple compounding with sensible assumptions. A Cash ISA earning an average of 3.5% a year, roughly where easy-access cash ISA rates have sat once you blend the better years against the leaner ones either side, grows to about £14,106. A Stocks & Shares ISA tracking global equities at an average 7% a year — below the long-run average most global index funds have historically delivered before charges — grows to roughly £19,672 over the same decade.
That gap, just over £5,500 on a single £10,000 deposit, is most of the argument for investing rather than saving when the money isn't needed for years. And it compounds harder the longer you leave it alone: run the same two rates out to twenty years and the invested figure roughly doubles again while the cash figure barely does.
Fees eat into that comparison, so it's worth knowing roughly what you're paying before you pick a platform, to name a few of the bigger names:
- Vanguard charges around 0.15% for the platform, plus roughly 0.23% for a global tracker fund such as the FTSE Global All Cap Index Fund.
- AJ Bell sits near 0.25%, tapering down on larger balances.
- Hargreaves Lansdown charges more, about 0.45% on the first £250,000, but the research tools and phone support are part of what that fee buys.
- Trading 212 charges no platform fee at all, which matters more than most people assume once a balance grows into five figures — and there are others in that bracket too.
Strip out a realistic combined fee drag and the net ten-year figure lands somewhere around £18,800 to £19,200 rather than the full £19,672 — still comfortably ahead of the cash outcome, just not quite as dramatic as the headline number suggests.
Risk is not a one-word answer
Averages flatten out a genuinely uncomfortable reality: markets don't move in a straight line, and neither does your ten-year outcome. Anyone who put £10,000 into a global tracker fund in January 2022 watched a meaningful chunk of it disappear within months, as inflation spiked and interest rates rose faster than markets had priced in. Those who held on rather than sold saw most of that recovered by 2024, and investors who kept contributing monthly through the dip ended up buying units more cheaply, which helped their eventual return rather than hurt it. That's the trade you're actually making with a Stocks & Shares ISA: real, sometimes uncomfortable volatility in exchange for a strong likelihood — not a guarantee — of a better outcome a decade out. Cash doesn't do this to you; a Cash ISA balance simply doesn't fall, which is exactly why it suits money you can't afford to see shrink even temporarily, and exactly why it's the wrong home for money you won't touch for ten years. Here's the part few comparison articles admit: past performance genuinely doesn't guarantee future returns, and anyone insisting equities "always" win over ten years is glossing over the 2000s, when a lump sum invested in UK or global shares at the start of the decade took the better part of ten years just to get back to where it started.
The mistake that costs people the most
Panic-selling a Stocks & Shares ISA in the middle of a downturn turns a paper loss into a real one.
It's the single most common way investors underperform their own investments, and it has nothing to do with picking the wrong fund. Someone who bought a global tracker fund in early 2022 and sold that autumn locked in a real loss rather than a paper one, then likely sat in cash and missed the recovery that followed through 2023 and 2024. The fund itself did roughly what it was designed to do over the following two years; the investor's timing did the damage, not the product. If you're going to hold a Stocks & Shares ISA at all, commit to leaving it alone for at least five years, ideally ten, and treat market falls as the price of admission rather than a signal to act.
When cash is the right call
None of this makes the Cash ISA a bad product — it makes it the wrong tool for the wrong job in a lot of the comparisons written about it. Money you'll need within three to five years belongs in cash, full stop: a house deposit due next year, a wedding booked for next spring, an emergency fund covering three to six months of outgoings. A Stocks & Shares ISA can fall 20% in a bad six months, and if you need to withdraw during exactly that window, the loss stops being theoretical.
Fixed-rate cash ISAs make sense too, but only if you genuinely know you won't need the money before the term ends — early withdrawal from most fixed-rate ISAs costs somewhere between 90 and 180 days of interest as a penalty. Don't lock a rate for longer than two years right now unless the fixed rate on offer is clearly above what easy-access accounts are paying; the flexibility of an easy-access ISA is worth more than a fraction of a percentage point of extra interest most of the time.
The middle path most people skip
The £20,000 allowance doesn't have to go entirely into one account, and since the 2024 reform, it doesn't even have to go into one provider. A common approach: keep three to six months of essential spending in an easy-access Cash ISA, then put everything beyond that into a Stocks & Shares ISA for money that won't be needed for five-plus years. Someone with £20,000 to allocate this tax year might put £6,000 into a Cash ISA as a top-up to their emergency fund and the remaining £14,000 into a low-cost global tracker — there's no rule saying the split has to be a round 50/50, and for most people it shouldn't be.
If you're under 40 and saving towards a first home or retirement, the Lifetime ISA is worth a look before either of the other two: pay in up to £4,000 a year, which counts towards rather than on top of the £20,000 total, and the government adds a 25% bonus — up to £1,000 a year — provided the money goes towards a first property worth £450,000 or less, or stays put until you turn 60. Take it out for any other reason and a 25% withdrawal charge claws back more than just the bonus, so it's not a substitute for an emergency fund, whatever the headline bonus makes it look like.
So which one actually suits you
If you won't touch the money for five years or more, the Stocks & Shares ISA is the better home for it — the ten-year numbers above aren't close enough to hedge on, and cash's only real advantage over that time horizon is that it lets you sleep at night, which is worth something but not £5,000. If the money might be needed sooner, or watching the balance drop 15% in a bad month would genuinely change your behaviour, keep it in cash and don't treat it as losing a competition you never entered.
Open both if you can. Nationwide or Moneybox for the cash portion, Vanguard or AJ Bell for the rest, and revisit the split every April when the new allowance resets — not because the market demands it, but because your own circumstances will have moved on more than you'd expect in twelve months.