Since his Budget last Wednesday, there has been a lot of speculation over whether Chancellor George Osborne has killed the cash ISA.
By making the first 1,000 of savings interest free of tax for basic-rate taxpayers, he made cash ISAsredundant for most people.
You would need 66,000 in the bank earning a market-beating return of 1.5% to earn that much interest in a year.
Even 40% taxpayers, who get a reduced 500 savings limit, need 33,000 worth of savings.
For all but the most avid holders of cash, that is more than enough.
They have little need for cash ISAallowance on top.
So does this really herald the death of the cash ISA? I would argue that they were dead and buriedyears ago.
The death sentence was pronounced when the Bank of England slashed base rates to 0.5% six years ago.
Since then, cash ISAshave faced death by a thousand rate cuts, asbanks and building societies jostledto slash their offerings to fresh lows.
The best easy access cash ISAnow pays just 1.5%, and that isnt even offered by a bank, but the government, through National Savings & Investments.
A combination of the Bank of England, the Funding for Lending Scheme (which meant the banks no longer needed to attract cash from savers to fund their lending) and bank greed struck down cash ISAslong before George Osborne stepped up to deliver the final rites.
Zombie Wealth Eaters
Savers who used their full cash ISAallowance each year for the past 15 years have actually seen the value of their money fall by 4,218 in real terms after inflation, according to wealth manager Nutmeg.
It warns that 21 million Britons are stuck with underperforming zombie cash Isas paying minimal rates of interest.
Cash ISAsdied years ago. Now they simply resemble the living dead.
Killer Stock Markets
The real killer has been the comparative success of stock markets since the financial crisis.
While 15,000 paid into the average savings account 10 years ago is now worth 16,321, it would have more than doubledto 31,890 if invested in the FTSE All Share index instead.
And with some canny stock picking, many investors will have enjoyed a far better return than that.
Obviously, there are risks to investing in stocks and shares ISAs, as the value of your capital is vulnerable to market movements.
Cash ISAs, by comparison, only offer your money the certainty of a slow painful death.
Cash kills wealth but private investors who embrace the stock market can make serious money.
By investing for the long term, year after year, you could even join the growing number of ordinary people who made 1 million from investing their wealth on the stock market.
To find out how investing in UK stocks can make you rich you need to read this Motley Fool report 7 Simple Steps For Seeking Serious Wealth.
This report, which is currently FREE, sets out how investing in stocks and shares can make you seriously rich. Itwon’t cost you a penny to download, so click here now.
Do NOT buy these 3 stocks
Theres lots of opportunity out there in todays market but theres also PLENTY of danger.
In anticipation of Champion Shares PROs brief opening to new members next week, the analyst team behind the Motley Fools most exclusive service has agreed to share 3 stocks they believe YOU would do best to avoid.
PRO research is rarely made available to the general public. To find out the names of these “don’t buy” companies — and to claim your 100% FREE copy of Steer Clear Stocks right away — simply click here.