ICR088 - Cash versus shares

In this episode of Informed Choice Radio, Martin talks about keeping your money in cash versus investing it in shares.

There is also a roundup of the latest personal finance news and an update from the world of Informed Choice.

Cash versus shares

In this episode of Informed Choice Radio, Martin talks about whether keeping your money in cash beats investing it in shares.

Personal finance journalist Paul Lewis has this week published new research showing money held in best buy cash savings accounts has fared better than money invested in the stock market over most investment periods since 1995.

Lewis compared 'active cash' with the return from a FTSE 100 index tracker fund.

He found that savings accounts beat the tracker in the majority of five year periods beginning each month from 1 January 1995 to the present.

But over the full 21 year term of the study, the chosen index tracker fund ended up producing a compound annual return of 6%, higher than the 5% produced by best buy savings accounts during that time.

Martin spends some time unpicking this study, agreeing with some parts and asking questions about others.

Personal finance news update

-Price inflation in the UK, as measured by the Consumer Prices Index, stayed unchanged at 0.3% in May.

-UK unemployment has fallen to 5%, its lowest since October 2005.

-The interest rate on benchmark 10-year German Bunds, bonds issued by the German government, has turned negative this week for the first time.

-Lloyds Banking Group has won its UK Supreme Court Case against a group of thousands of investors.

-The Bank of England has issued a warning to say that uncertainty surrounding the EU referendum result is the "largest immediate risk" currently facing global financial markets.

Useful links mentioned in this episode

-Cash can beat shares for up to 18 years, study says

-Paul Lewis Money - Cash vs Shares (full study)

-It's time to abolish the FTSE 100

Get answers to your personal finance questions

Do you have a personal finance or investing question for Martin?

Email martin@icfp.co.uk or ask on Twitter @martinbamford.

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