Average interest rates on Top 20 ‘best buy’ cash ISAs have fallen 48% over the last year, which has likely left many savers wondering where they can look for better returns.

Our research shows average rates on these Top 20 ‘best buy’ cash ISAs fell to just 0.87% in June 2020, compared to 1.67% the same period last year. The lowest interest rates on offer are from instant access cash ISAs, at an average of 0.66% in June 2020, a substantial decrease from 1.47% at the same time last year.   

Unfortunately for savers with cash ISAs, the outlook for higher rates is not promising. The Bank of England is expected to keep rates at record lows and with the Government building up huge debts, there are even talks of it resorting to financial repression. This involves offering ultra-low interest rates amidst elevated rates of inflation.

Despite poor returns, savers are continuing to pour money into cash ISAs. The number subscribed to cash ISAs accounts jumped 20.8% to 8.5m in the last year, whilst the amount subscribed also increased to £44bn, up 19.8% from £36.7bn the year before.

However, for savers that would consider higher risk higher return investments, and are investing for the long term, equities may be a good option. Equities have outperformed all other asset classes in the long-term. Since 1925, equities have delivered average annual returns of 12.4%, higher returns than cash (4.9%), global bonds (6.6%), rental property (7.2%) and gold (7.7%).

It can be difficult to invest in equities at the right price when conditions are volatile, so one way to approach this would be stagger investments in the stock market over a period of time.

Although cash is considered a safe asset class in volatile conditions, cash products will not give savers the returns they need to build wealth over the long term. This is why investing in other asset classes and building a diversified portfolio is so important. Read more from us on this topic in the Daily Express and YourMoney.com: