Why is the UK a Nation of Savers?

Why is the UK a nation of savers? Take a look at the cultural mindset which has led us to save more than they invest — and how this could ultimately be detrimental in the long-term.

By Caragh Medlicott

Created on: 15/12/2025

Updated: 16/12/2025

Reading time: 8 mins

Key takeaways

Research seems to suggest that the UK tends to favour saving over investing
The UK’s large amount of money in savings accounts points to a growing investment gap, with lack of confidence sometimes putting people off exploring their investment options
Balancing cash for emergencies with long-term investments could help grow wealth while providing financial security.

When it comes to finances, in the UK we tend to err on the side of caution. This means that, as a nation, we tend to save more than we invest ^[1]. But why is this the case, and should you care?

Since the 2025 Autumn Budget, there’s been more conversation about the ways people approach saving in the UK. You may have heard, for example, that we’re “a nation of savers” — and in many ways, that is true.

Here’s a rough idea of what that looks like. According to the 2022 FCA Financial Lives Survey, 42% of UK adults had savings of over £10,000. However, a significant portion of these savers preferred to keep their money in cash — 8% held all their assets in cash, while 20% kept at least 75% of their wealth in cash. ^[1]

There are likely a few reasons for this. High-interest rates over the past year have encouraged even more people to save, providing a sense of safety during uncertain times.^[2]

But is this approach always the best for long-term financial goals?

While saving is vital for emergencies and short-term needs, relying solely on cash savings could mean missing out on better ways to grow your money.

This article explores why UK savers might want to rethink their strategies, balancing saving and investing to achieve financial security and future growth.

The UK savings boom
The £614 billion problem: Money sitting idle in cash
Cash vs investing: The real performance gap
Why the UK prefer cash over investing: The real barriers
The hidden risks of cash savings
How much should you keep in cash vs investments?
Common investing myths
Getting started: How to move from cash to investing
Summary

The UK savings boom

Our savings culture is thriving.

According to an article published by the Financial Times in 2025, UK savers have more than £614 billion of spare cash in savings accounts.

With the Bank of England’s base rate peaking at 4.75% at the start of 2025^[3], many savers have enjoyed attractive returns on their cash, which could partially explain the boom in UK savings.

At the same time, the cost-of-living crisis has driven precautionary actions, with people storing money away for a rainy day. Over a third of UK households dipped into their savings to make ends meet in the six months leading up to November 2024^[4]. For many, stashing cash seems to provide a sense of security, especially during periods of economic uncertainty.

However, this cultural preference for cash could sometimes mean missing out on greater growth potential. While it’s great to have savings for emergencies, too much money left idle in low-yield accounts can lose value over time due to inflation.

In some ways, our approach to saving in the UK is more than just individual preference — it relates to a cultural mindset.

If we look at the United States, for example, the evidence suggests a much greater belief in the power of the stock market. In fact, The Telegraph reported in September 2025 that Americans had an average of £169,000 in equity and investment shares — almost nine times more than the average £19,000 in the UK ^[5].

This is one reason why the government’s 2025 budget included plans to lower the Cash ISA allowance in 2027 — with the hopes of encouraging more people to invest in Stocks and Shares ISAs instead.

The £614 billion problem: money sitting idle in cash

The UK is facing a significant investment gap. Barclays reports that between 2022 and 2024, this gap grew by over 30%, with around 15 million UK adults holding more than £610 billion ^[6]. Money that could be potentially invested, rather than sitting as cash savings.

Despite this, Cash ISAs remain far more popular than Stocks and Shares ISAs.

In 2023/2024, 9.94 million Cash ISAs were subscribed to, significantly outnumbering the 4.09 million Stocks and Shares ISAs ^[7]. This trend is consistent with 15% of UK adults holding a Stocks and Shares ISA by 2025, compared to nearly double this amount (29%) holding a Cash ISA ^[8].

Cash vs investing: The real performance gap

The numbers speak for themselves. Between February 2024 to February 2025, Stocks and Shares ISAs returned an average of 11.86%, compared to just 3.80% for cash ISAs.

Investing is about long-term trends, and time in the market generally beats timing the market. With investing, you would expect to see the performance rise and fall over the short term, but the overall goal is to give it time to outperform these periods of volatility. This is the reason why many people consider investing to be a long-term strategy (something you’d do for 5-10 years at a minimum).

When Cash ISAs actually beat Stocks and Shares ISAs

Of course, there are short-term periods where cash outperforms investments. For example:

Between 2022-2023: Cash ISAs returned 1.71%, while stocks lost 3.27%.^[9]
Between 2023-2024: Cash ISAs returned 3.73%, and stocks gained 2.80%.^[9]
And overall, short-term volatility can favour cash (for example, if you check your investment performance one day and the stock market is on downturn). But zooming out and looking at bigger picture, in the long-term, the trend remains in favour of investments. Of course, on an individual level investments can go up and down meaning you could get back less than you put in – which is one reason investing is usually recommended as a long-term financial strategy.

See how Wealthify’s investments have performed in recent years

Why the UK prefer cash over investing: The real barriers

For many people in the UK, keeping money in cash isn’t just a preference: it’s a reflection of deeper structural barriers that make investing feel out of reach.

Low financial literacy
A major obstacle is simply not knowing where to start. Research suggests 23 million UK adults – around 64% – have poor financial literacy, leaving a huge portion of the population without the confidence or knowledge to make informed investment decisions ^[10].
Low confidence in the UK economy
Even those who are open to investing often hesitate because they don’t trust the economic outlook. Only 17% of adults feel confident about future stock market performance, and just 16% feel confident about the UK economy overall^[10].
Fear and risk aversion
Even when people understand the basics, fear often takes over. According to our own research, 66% of Brits are nervous about investing, highlighting just how intimidating the markets can feel^[11].
Choice paralysis
With thousands of funds, platforms and products to choose from, many would-be investors feel overwhelmed before they even begin. Barclays notes that this “choice paralysis” is a major contributor to the UK’s persistent investment gap.
The gender gap
Women still face disproportionate barriers. As covered by Female Invest, in the UK, men have £567 billion more invested than women — this is indiactive of both confidence and knowledge gaps that hinder women beginning their own investing journey ^[12].

Why are there fewer female investors than men?

The hidden risks of cash savings

It’s a common misconception that cash is risk-free. While your money may not lose value outright, inflation can silently erode its purchasing power.

For example, if inflation runs at 3.6%, while your savings account only earns, say, 2% interest, your money is effectively shrinking in value by 1.6% each year (because prices rise faster than your interest accrues in this example). As of November 2025, UK inflation stood at 3.6%, according to the Bank of England.

Meanwhile, many savings accounts pay significantly less: the average Instant Access Savings rate is reported at around 2.23%, and variable Cash ISA rates about 2.05%.

That means Cash sitting idle in typical accounts could be losing real purchasing power. Even when savings rates flirt with higher numbers, fewer than half of available savings products currently beat inflation — meaning most savers are facing a real-terms loss.

The risks of investing

While investing can offer the potential for higher long-term returns, it is not without risk. Unlike cash savings, the value of investments can go down as well as up, particularly in the short term. Market volatility, economic downturns, geopolitical events, or changes in interest rates can all negatively affect investment values.

There is also the risk of timing: if you need to access your money during a market downturn, you could be forced to sell at a loss. Different asset classes carry different levels of risk, and poorly diversified portfolios can magnify potential losses. Additionally, some investments may be less liquid, meaning your money may not be immediately accessible.

For these reasons, investing is generally more suitable for money you can afford to leave untouched for the medium to long term, and it’s important to ensure any investment strategy aligns with your financial goals, time horizon, and tolerance for risk.

How much should you keep in cash vs investments?

The general rule of thumb is to keep 3-6 months’ worth of essential expenses in an emergency fund. This ensures you have quick access to cash for unforeseen expenses, without locking up everything in investments.

For long-term goals, money you don’t need to access for at least five years could be better placed in investments. Using your annual ISA allowance strategically can also help you grow your money tax-efficiently.

Common investing myths

There are several misconceptions that stop people from investing. Let’s debunk a few:

"I’ll need the money soon." Flexible Stocks and Shares ISAs allow you to withdraw your money when needed, though it’s worth noting this still isn’t instant and can take up to 10 working days
"Markets are too volatile right now." Timing the market is almost impossible, but strategies such as cost pound averaging could deliver better long-term returns.
"I don’t understand it well enough." Managed portfolios take the guesswork out of investing, with experts doing the heavy lifting for you.
"Investing is only for rich people." You can start small, even if it’s just £50 a month, and compound interest means even small amounts have the potential to grow over time.

Getting started: How to move from cash to investing

If you’re ready to start investing, follow these steps:

Review your cash savings to calculate how much you need for emergencies
Start small, investing a manageable amount each month to build confidence
Research investment platforms and use tools like investment calculators to set goals
Consider speaking to a financial adviser for personalised advice
Consider tax-efficient options, like ISAs

Remember, investing isn’t about taking reckless risks — it’s about potentially growing your money steadily over time.

If we’re to get better at this as a nation, we may need to remind ourselves of the old British adage: Keep calm and carry on.

Summary

While fears around risk and a lack of confidence still hold many back, you don’t need to be an expert to start investing. Managed portfolios and beginner-friendly platforms make it easier than ever to invest without navigating everything alone.

A balanced approach is what matters. Keeping 3–6 months of expenses in cash provides essential security, while investing the rest for the long term allows you to benefit from time in the market and the power of compound growth (even if you start small).

Cash and investments both play a role. But combining them strategically is the key to turning caution into long-term financial confidence.

For more information, read our guide on should I save or invest my money?

Your tax treatment will depend on your individual circumstances, and it may be subject to change in the future.

With investing, your capital is at risk, so the value of your investments can go down as well as up, which means you could get back less than you initially invested.

Wealthify does not provide advice. If you’re not sure whether investing is right for you, please speak to a financial adviser.