Three in five (60%) cash ISA holders in the UK could be persuaded to move some of their funds and invest in a stocks and shares ISA, a new report from Royal London has stated.

According to the group’s findings, those who aren’t currently investing in a stocks and shares ISA believe that financial constraints are the main barrier to them making the decision to invest, with 42% stating that not having enough money was stopping them from investing.

Royal London stated that more than 25 years since ISAs were launched, there is still “widespread confusion” about how they work and how they can save tax. A new report by the firm, The ISA landscape, includes insights into what people know about how ISAs and the barriers to moving funds from cash ISAs to stocks and shares ISAs.

The research was conducted by Opinium on behalf of Royal London in April this year and used a sample size of 4,000 UK adults.

Consumer finance specialist at Royal London, Sarah Pennells, said: “Cash is king for short-term savings, but for those who are comfortable with the risks of investing and can leave their money invested for at least five years, a stocks and shares ISA may be worth considering.

“The most common reason people say they don’t currently invest is because they don’t have enough money, but one in four say that not understanding stocks and shares is a barrier to investing, while almost one in six say they’re unsure of where to invest.”

Royal London revealed that the second largest barrier to people putting their money into investments was their concern about the risk they were taking with their funds. Over a third (35%) of people who don’t currently invest had concerns about potential financial losses from putting their savings into investments, while 12% were worried about accessing their money if they needed it.

Meanwhile, the potential for better returns would be the main driver for those with a cash ISA looking to move some of their money over to a stocks and shares ISA (39%).

Pennells added: “Investing isn’t right for everyone, but some cash ISA savers could be missing out on the potential for higher returns, especially over the longer term.”

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