In recent times, it's clear the Government wants ordinary Britons to turn to investing rather than parking their wealth in cash.

A cut to the cash Isa limit to £12,000 will kick in from 2027 for under 65s in a move to coerce people into giving investing a try.

For those who have stuck to cash Isa instead of a stocks and shares one since 2010 are likely to have fallen victim to inflation, new data shows.

The long-term gap between stocks and shares and cash Isas has widened, analysis from Moneyfacts Compare shows. 

Since 2010, £100 in the average cash Isa would have grown to £130. Meanwhile, the same amount in the typical stocks & shares Isa would have grown to £233.

The average annual return for a cash Isa is 1.79 per cent, according to the Moneyfacts Compare average cash Isa rate while stocks and shares Isas at 6.79 per cent easily outpacing inflation between 2010 to 2025 at 2.92 per cent, according to Bank of England figures.

The return for stocks and shares Isas over this time is based on the returns of a diversified basket of funds from the London Stock Exchange Group's Lipper data and including funds across property, emerging markets, UK Gilts, Japan and European Smaller Companies. 

Turbulent returns on stocks and shares Isas make them more suited for long-term growth, to ride out any rough patches.

Caitlyn Eastell, of Moneyfacts Compare, says: 'When it comes to building long-term wealth, investing through a stocks and shares Isa outperforms saving in cash. 

'This gap is despite the stock market’s turbulence over the last 15 years, which was caused by Brexit, a global pandemic and the cost-of-living crisis. It proves that staying invested, despite periods of volatility, pays off.'

Cash Isas have been a hotly debated topic this year, especially as there has been a significant push for growth from the Government. 

In the Budget, the Chancellor announced that the cash Isa limit will be cut to £12,000 for those under 65 from 2027. 

The Chancellor said she wants to get the balance right between saving and investing and to make savers' money work harder for them. 

Ms Eastell says: 'While it may push some savers towards investing, lots of work still needs to be done to shift the attitudes of savers that are more risk averse.'

This is evident in the fact that in the first six months of the year, savers poured £42.5billion into the tax-free accounts, analysis from investment firm Janus Henderson Investment Trusts shows.

A total of 44p in every pound stashed away by savers is now put in a cash Isa. 

This represents 44 per cent of the estimated £96billion saved by British households during that period.

Ms Eastell says: 'Cash Isas still play an important role, their more stable returns could be better suited for shorter-term goals that are more about preserving money as opposed to growing it, such as building an emergency fund.'

Banks and financial firms will be able to offer customers 'targeted support' from April next year financial watchdog the FCA has said. 

This will allow firms to make generic suggestions to customers on what they could do with their money based on their financial circumstances, and make recommendations based on what people in similar situations do with their money.

This could include suggestions to people to invest for better returns if they are holding 'too much' cash.

Some seven million people hold more than £10,000 in cash savings, FCA data shows, which it says could deliver much better returns if held in stocks and shares.