Savers in the UK could miss out on hundreds of billions of pounds in combined returns, totalling as much as £2trn by one measure, over the next decade by keeping their money in low-interest bank accounts, according to new analysis by Murphy Wealth.

Research based on Bank of England (BoE) data found that £1.2trn is currently held in bank accounts paying a weighted average interest rate of 1.2%. If that rate remained unchanged, the cash pile would grow to around £1.4trn over 10 years.

By contrast, a 6% average annual return would increase the same pot to just over £2trn, while matching the MSCI World Index’s 12.4% average annual return since 2016 would take it above £3.4trn, around £2 trillion more than leaving the money in cash. Even a 4% return would produce around £1.7 trillion, the wealth fund has calculated.

Murphy Wealth said the 1.2% average interest rate was well below the past decade’s average inflation rate of 3.38%, meaning cash savings could lose purchasing power in real terms. Cash ISAs remain particularly popular, with around 9.94 million accounts subscribed to in 2023/24, compared with 4.09 million stocks and shares ISAs. However, the total value of stocks and shares ISAs was higher at £511 billion, against £360 billion for cash ISAs.

Adrian Murphy, CEO of Murphy Wealth, said: "Cash feels safe, but hoarding too much of your savings in low-interest bank accounts carries its own risks. Slowly but surely, you undermine your wealth’s ability to keep pace with inflation, gradually eroding its purchasing power.

“The evidence is clear: over time, a well-managed investment portfolio has consistently outperformed cash. Everyone should have a cash buffer to cover unexpected costs, but long-term savings – money you do not intend on using for years – should be invested.

“It is really positive that moves are being made to encourage more people to put their money to work in the stock market. But we need to do more to help savers realise that holding cash will not build meaningful wealth."

The Government is already considering measures to encourage greater investment, including a proposed £12,000 annual cash ISA contribution limit for savers under 65 and its ‘Savvy the Squirrel’ financial education campaign.

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