Investors might consider switching their cash savings into high-yielding equities, due to the good long-term performance of stocks and shares.
Investors can gain good yields from shares, an expert has pointed out.
Speaking to news agency Thomson Reuters, senior partner at independent financial services group Killik & Co, Paul Killik, said that equities returns had experienced "very strong growth" over the past five years.
The significant stock market volatility that has been registered in the wake of the credit crunch over recent months has been a factor behind many investors switching their savings to risk-free cash accounts, however.
Many have also been tempted by high cash savings account rates: Birmingham Midshires is currently offering 6.5 per cent for its online saver and Chelsea Building Society is also providing a 6.1 per cent rate.
Nevertheless inflation, which eats into the value of cash, is also on the up. According to the retail price index (RPI), it now stands at 4.6 per cent: the highest level since 1991. This means that cash savers, particularly those who have their money in accounts which do not promise to beat RPI, will not get good value for money due to their risk-averse attitude.
In addition, certain shares, while carrying higher risks than cash, offer a potentially greater income than these cash accounts. For example shares in BT yield 7.2 per cent net, and Lloyds TSB also currently yields 9.2 per cent net.
