Forget a cash ISA! If you want to make a million here’s 2 things I’d do instead

The returns on cash ISAs mean that the chances of becoming a ‘cash ISA millionaire’ are extremely slim. Put simply, the best cash ISA’s current return of 1.5% per year is going to be insufficient to turn even large sums of capital into a seven-figure sum – even over a long period. And when the effects of inflation are factored in, the returns on offer are even more undesirable.

In contrast, the stock market may now offer good value for money compared to its historic ranges. Therefore, investing a portion of cash in FTSE 100 and FTSE 250 shares could be a shrewd move for investors, while also maintaining sufficient cash levels in a savings account in case of emergencies.


While mid- and large-cap shares are generally highly liquid, falling stock markets may cause investors to become unwilling to sell their holdings at a loss. As such, it may be a sound move to hold some cash in case liquidity is required in the short run. This could be for things such as house or car repairs, or any other life event where cash is needed.

However, since tax changes have meant that the first £1,000 in interest income received per year is no longer subject to income tax, there seems to be little benefit in having a cash ISA. Savings accounts generally offer similar interest rates to cash ISAs at the present time, and may prove to be just as effective, in terms of providing liquidity, if needed. For larger investors, having cash in a savings account will not use up part of their annual ISA allowance, which is capped at a combined £20,000 for cash and Stocks & Shares ISAs.

Growth potential

While having some liquidity is sensible, the majority of an individual’s wealth may be better off invested in the stock market. That’s especially the case if a person has a long-term time horizon, or is seeking to generate an income from their capital.

At the present time, there appears to be a number of FTSE 100 and FTSE 250 shares which offer good value for money. Both indexes have fallen significantly since mid-2018, and may offer relatively high dividend yields, as well as margins of safety. Furthermore, with the world economy expected to grow by over 3.5% in 2019, the opportunities to generate an impressive level of capital growth could be higher than the stock market is currently pricing in. Therefore, there could be buying opportunities on offer.

Long-term prospects

Having a mix of cash in a savings account for short-term requirements, as well as a portfolio of shares for long-term growth, could be a sound strategy to implement when seeking to making a million. A cash ISA, though, doesn’t seem to be appealing for either purpose. As such, it may prove to be surplus to requirements for many individuals.

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