With one-year savings accounts now offering returns of about 5%, the debate between holding cash and investing in shares has resurfaced. While cash provides safety and avoids stock market volatility, shares are typically considered for long-term growth.
Historical evidence offers differing perspectives. Barclays Private Bank's analysis indicates that UK shares outperformed cash in 91% of rolling 10-year periods since 1899. However, research by Paul Lewis, published in 2016, found that a FTSE 100 tracker beat the best savings accounts only half the time across rolling ten-year periods between 1995 and 2016, using a more demanding comparison method.
More recent analysis, covering December 2000 to August 2026, compared MSCI UK and MSCI World indices against cash rolled into one-year fixes. Over rolling ten-year periods to August 2026, UK shares beat cash 91% of the time, and global shares did so 90% of the time. Over the entire period, a £10,000 investment in a global tracker grew to approximately £67,600, while the same amount in one-year cash fixes reached about £25,000.
The duration of investment is a key factor. Barclays found that UK shares beat cash in 70% of rolling two-year periods, increasing to 91% over ten years. However, even over ten years, cash still came out ahead in about one in 11 periods. Cash also carries a risk related to future interest rates, as today's rates cannot be guaranteed for decades.