The Motley Fool

Looking for the best Cash ISA rate? I think you’re missing the wood for the trees!

Image source: Getty Images.

With interest rates remaining low, many people these days spend a considerable amount of time looking for the best Cash ISA and easy-access savings accounts interest rates. In order to pick up a little bit more interest, they monitor popular price comparison websites for the highest interest rates and then move their money around between different savings account providers in order to pick up the highest rates.

You have to wonder if it’s worth the effort though.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Shocking interest rates

Ultimately, unless you have hundreds of thousands of pounds to deposit, it’s really not going to make a big difference whether you’re earning 1.3%, 1.4%, or 1.45% on your money. On savings of £10,000, an interest rate of 1.45% gets you interest of just £145 for the year while 1.4% gets you interest of £140. That extra five pounds for the year is hardly going to change your life, is it?

I’ll also point out that if your money is sitting in a Cash ISA or an easy-access savings account earning 1.45%, or so, it’s actually losing purchasing power over time because inflation (rising prices of goods and services) is running at around 2%.

So, in my view, it doesn’t really matter what interest rate you’re getting in the current low-interest-rate environment. The bottom line is that if your money is sitting in cash savings, you’re getting poorer, in real terms, over time.

Much higher returns

The good news however, is if you’re willing to invest your money, as opposed to just saving it, it’s possible to generate much higher returns.

For example, on my Royal Dutch Shell shares, I pick up a dividend yield of around 6% per year – over four times the best Cash ISA rate. Every quarter, I receive a nice little cash payment from Shell, simply for being a shareholder.

Similarly, my Lloyds Banking Group and Legal & General shares also pay me bumper dividends on a regular basis, all for doing nothing. The yield I’m receiving on Lloyds is around 5%, while the one I’m getting on Legal & General is nearly 7%.

At the same time, I’m also picking up some huge capital gains from growth stocks. For example, early last year I bought some shares in sportswear/trainer specialist JD Sports Fashion for around 330p. Today, those shares are worth 770p, meaning I’ve made a return of more than 130% in less than two years.

More recently, I picked up some shares in online fashion retailer ASOS in July, and I’m already sitting on a nice 30% gain. Not bad in less than five months.

Of course, it’s important to be aware of the risks of investing in the stock market. Share prices rise and fall, meaning it’s possible to lose money. Compared to Cash ISAs, or easy-access savings accounts though, stocks are far more powerful as a wealth generator.

Ultimately, if you’re focused on the best Cash ISA rate, or the best easy-access savings account rate, I think you’re missing the wood for the trees.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Edward Sheldon owns shares in Royal Dutch Shell, Lloyds Banking Group, Legal & General, ASOS and JD Sports Fashion. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.