When you invest, your capital is at risk. Eligibility to invest into an ISA and the value of tax savings depend on your personal circumstances and all tax rules may change.


Most ISA investors are saving for retirement.


On average, ISA investors expect to build an ISA worth just over £200K by retirement.


ISAs are the no.1 priority for investors, ahead of their pension and crypto.


ISA investors are either increasing or maintaining their contributions this year. Only 2% plan to reduce their ISA contributions.


Since being introduced by the UK government in 1999 to encourage us all to save more, ISAs have steadily risen in popularity.

In the 2019/20 tax year, of the 13 million Adult ISAs opened and £75 billion paid in, 75% of it was cash.

Interestingly, when you look at the value of what’s inside ISAs the picture looks a little different. Stocks and shares ISA holdings account for 49% of the market value of ISA funds.

Source: HMRC, Commentary for Annual savings statistics: June 2021.

Please note, these numbers and values are historic and not a reliable indicator of future returns.

About our ISA Research

Freetrade surveyed ISA investors to understand more about their goals and priorities.

Of the 1,000 ISA holders we spoke to, 700 have a stocks and shares ISA and 300 have cash ISAs.

Similarly to HMRC's annual ISA numbers, the highest proportion of respondents were from older age groups.

Our research had a balanced gender split, with almost the same amount of men and women taking part.

Our research spanned investors from across Britain, with the highest proportions from London, the South East and North West.

Cash ISA or stocks and shares ISA?

About a third (30%) of the ISA holders we spoke to only have a cash ISA.  

42% of cash ISA holders want to know exactly what interest rate they’re getting while 36% see their cash ISA as something for emergency funds. 

More worryingly, 32% of cash ISA investors have one because they don’t

understand how investment ISAs work and 37% said investing in the stock market worries them. 

These answers were particularly common amongst women. Women are more likely to be worried by the stock market (39% vs 34%) and they also find stocks and shares ISAs more confusing (37% vs 24%). 

Why do you only have a cash ISA?

Reasons why people prefer cash ISAs to stocks and shares ISAs

Exact interest rate


Stock markets worry me


Emergency cash


Stocks and shares ISAs are confusing


Using my cash soon


Didn't know about other ISAs


When it comes to the difference between cash and stocks and shares ISAs we think it is important to differentiate between cash savings and investing.

How we think about cash.

Cash is the ultimate low-risk asset. And while it plays an important part in your overall finances and asset mix, it won’t grow in value without constant contributions.

In the very short term, the value of cash doesn’t change. £1,000 today will be near enough £1,000 tomorrow or even next month. This makes cash a good option for your emergency or rainy day savings or money you know you’ll need to spend soon.

But thinking longer-term, cash can be eroded and there’s a simple reason for this. If the rate of inflation is higher than the interest you earn on your cash (which it has been for while), the amount of stuff you can buy with that cash will fall over time. Your cash is losing its value.

This is where investing comes in.

Investing is about trying to make a positive return and growing your wealth over the long term. The aim is to make a return higher than inflation so that your real wealth grows and you can buy more in the future.  

To do this you’ll need to invest in assets whose value can change and hopefully grow over time.  And, investing in the stock market has historically been a great way to do this. With a long-term approach, it will likely continue to be so.

Why the stock market?

Over the long term, economies tend to grow. They grow because populations (in most places) grow, and productivity (our ability to produce more goods and services with the same pair of hands) also grows. If economies grow over the long run, it's fair to assume that company profits in aggregate should also grow. Over time, stock prices tend to track underlying profit growth.

Why long term?

Stock markets are designed to move as they take in new information - the good, the bad and the OK. When you invest you need to be ready for two things: ready for the value of your investments to move up and down and to leave your money invested for as long as feasible. This way, you’re not only comfortable with short term price changes but they matter less.

How much cash should I hold?

Paul Allison

Head of Equity Research

Please remember, when you invest, your capital is at risk. This means the value of your investments can rise as well as fall, so you may get back less than you invested.

ISA goals

All investment decisions should start with why. So we started our research by asking people about their ambitions for their ISAs.

What’s clear from the results is that ISAs serve lots of different purposes.

The headline reason people have an ISA is to help fund retirement (59% of respondents).

After retirement, the most common reason for an ISA is for emergency savings (37%), while 19% are using their ISA to create wealth for future generations. Specific purchases like a house (13%) or a car (8%) were also popular ISA goals.   

Why do you have an ISA?

Digging a little deeper, there were some interesting differences between male and female ISA goals.

After retirement, family is on the mind of most ISA investors but to what extent and why varies between different groups. 

Female investors have more specific goals for their ISAs like saving for a home, a holiday or the cost of bringing up children.

Male ISA investors were more likely to have general goals for their ISAs such as to create future family wealth.

Common reasons for a stocks and shares ISA.

What size ISA pot are you expecting to reach by retirement?

The UK has around 2,000 ISA millionaires at the moment* and this number is expected to grow as investors’ pots compound. 

However, most of the ISA holders we spoke to think the £1million milestone remains out of reach.

On average, ISA investors expect to build a pot of £218,000 by retirement, with 41% thinking they might not even pass the £100,000 mark. 

Those with hopes to become an ISA millionaire were more likely to be men rather than women. 

Stocks and shares ISA account size.

When you invest, your capital is at risk. The value of investments and the income from them can go down as well as up so you may get back less than you invest.

Matt's ISA Story

Matt, 28

Scientific Researcher

Matt is a 28-year-old scientific researcher and spoke to us about his ISA goals.

"Like a lot of young people, I started taking a bigger interest in my finances during lockdown. I wasn't happy about the returns on offer from my cash savings so I decided to invest in a stocks and shares ISA instead. 

Right now I've got just over £20,000 in my pot and I want to grow that into £1million.

I'm targeting a return of 9% per annum, which might seem ambitious right now with all the volatility there is.

But I'm committed to staying invested for the long-run. I don't want to be still working when I'm 65 if I don't have to and it would be nice to have the option of retiring early someday. 

At the moment I'm paying in £550 monthly to my ISA, but it would be nice to be able to max out my allowance when I'm older."

Hitting the seven-figure mark in your stocks and shares ISA is a pretty remarkable achievement.

But, a bit like the most successful artists, sportspeople and business tycoons, getting there is all about doing the simple stuff well and consistently.

Even if a £1m ISA isn’t in your future, the basic habits of monthly investing in a diversified portfolio informed by your financial goals still matters more than the amount in there.

When thinking about your potential investment returns, we’d suggest taking the same grounded approach. Treat anything that promises blockbuster returns with a healthy degree of scepticism.

And while you might meet your expected investment return one year or even exceed it the next, there’ll be years when the opposite is true and performance will disappoint. 

Whether you are aiming for an ISA pot of £100,000 or £1 million, the best opportunity of reaching your goal lies in building a diversified portfolio and sticking with it. Getting starry-eyed at the big prize and not focusing enough on the groundwork may lead to decisions that are overly informed by short-termism.

The (more realistic) ISA millionaire.

Dan Lane

Senior Investment Analyst

How much could your ISA be worth?

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Stocks and shares ISA calculator

What's your investment priority in 2022?

ISAs are an important part of people’s financial toolkit, being the top priority along with pensions. Both ISAs and pensions are way above property, crypto and alternatives in terms of investment priority in 2022.

Stocks and shares ISA or pension?

ISA investing behaviours

With ISA goals set, the next bit is getting there. And this breaks down into two: how you invest and what you invest in.

Behaviour plays a big role in getting us closer to our ISA goals. And the best bit, good investing behaviours are generally something we can control.

Will you use your full ISA allowance?

Most investors (51%) don’t think they’ll be able to use their full £20,000 ISA allowance. However, just under a third (29%) think they will, with the remainder (20%) not sure.

Anyone that thinks they will use the full allowance, is more likely to be older and slightly more likely to be male. 

Make the most of your ISA allowance.

Percentage of people that are planning to use their full ISA allowance

ISA myth busting

A common ISA myth is that you need lots of money to start. But while everyone has a £20,000 ISA allowance to use each tax year, you don’t have to hit that limit. Some people will, some won’t, and it’ll reset come the next tax year.

ISA allowance.

Will you add more or less to your ISA in 2022?

ISA investors are staying put. Almost a third (31%) of ISA investors plan to increase their ISA contribution this year while 67% plan to invest the same amount - meaning very few (2%) plan to invest less this year. 

These results are pretty remarkable given the current level of uncertainty, volatility in markets and the cost-of-living squeeze. Despite these immediate challenges, ISA investors are sticking to their longer-term plans, refusing to be blown off course. 

Percentage of people considering to increase their ISA contributions in 2022

Funding the increase

Pay rises (46%) and cutting back on general expenses (45%) were the most common ways ISA investors expect to be able to pay more into their ISA this year. 

Money from inheritance (21%) and moving cash from savings accounts or cash ISAs collecting little or no interest (17%) were also common ways to fund increased contributions. 

Kristine's ISA Story

Kristine, 37

IT consultant

Kristine is a 37-year old IT consultant who recently started her stocks and shares ISA.

"My goal is to achieve financial freedom as soon as possible so I can retire in my 40s. 

When I decided I wanted to retire younger, one of the first things I did was to research how to achieve the highest potential returns for my money.

Investing in an ISA is one tool to achieve my goal. Since my time horizon is long-term, I do not mind market volatility.

I do research on companies that I think will give me good returns in the years to come, invest in these companies, then hold them for the long-term.

I believe good old-fashioned research and patience will give you the best returns, based on my experience. Most of my stock portfolio has a medium to long-term time horizon, so market volatility does not bother me much. If anything, I try to buy quality stocks at a reasonable price."

How often do you invest?

Most ISA investors invest monthly or slightly less - 40% monthly, 25% annually and 12% every 2 - 6 months.

Interestingly, when looking at differences between male and female investing behaviours, women are more likely to invest frequently, whether weekly or fortnightly while more men invest annually. A slightly higher proportion of men than women invest monthly. 

How often do people invest in stocks and shares ISA?

Making investing a regular habit comes with a few benefits.

Once you do, you’ll get used to it being something you set money aside for each month. And when you invest regularly you’ll likely become less worried about when you invest too.

Timing the market is notoriously difficult and while you might miss the worst days, you’ll likely miss some of the best days too. Over the long term investors who have stayed put, have generally been rewarded.

Timing the market.

Emilie Stevens

Freetrade Analyst

Focus on time in the market, not timing.

By dipping in and out of the market, you increase the possibility of missing the bad and the good days. The more good days you miss, the bigger the dent to your portfolio’s growth. 

Here’s an example of the potential impact dipping in and out of the US market could have. 

By missing just a few of the S&P 500’s good days between 1990 and 2019, the growth and size of your initial $10,000 investment could look pretty different. 

Staying invested gives you the best chance of not missing the good days. 

Potential impact on your returns if you were dipping in and out of the S&P 500 Index between 1990-2019

Source: adapted from Hartford Funds.

Please remember, past performance is not a reliable indicator of future results.

ISA investments

So far we’ve covered ISA goals and ISA behaviours. Now we’re lifting the lid on ISA investments.

We spoke to ISA investors about what investments they hold and how they expect them to perform.

What annual return do you expect to make over the next three years?

The average ISA investor expects to make returns of 5.8% a year over the next three years.

Digging a little deeper, we found male investors were slightly more optimistic than female investors. And when expectations were split by age, older investors tended to be more pessimistic than younger ISA investors. 

The differences in levels of optimism among these groups may reflect their investment time horizon. However, whether you’re optimistic or pessimistic, what’s important is you pick the right investments for your circumstances. 

What annual return do you expect to make for your stocks and shares ISA over the next three years?

What investment do you think will provide the best returns over the next three years?

Almost half of ISA investors (49%) expect funds (e.g. mutual funds, ETFs, investment trusts) will produce the best investment returns over the next few years. 

After funds, 31% expect individual shares to perform best, 11% think alternatives (e.g. private equity) and 9% believe bonds.

What investments do you think will bring the most returns over the next three years for your stocks and shares ISA?

That first step into investing can feel more like a hurdle sometimes.

That first step into investing can feel more like a hurdle to some. Choosing from the thousands of stocks available might lead to some analysis paralysis.

So it’s encouraging to see ISA investors picking options like ETFs, investment trusts and mutual funds. Generally, these can provide an investor with a diversified portfolio.

Funds are made up of a selection of stocks and sometimes other assets, which means the investor doesn’t have to put in the legwork to pick a bunch of these on their own.

Ideally, given the number of stocks a fund usually includes, it’ll have better diversification compared to a portfolio with a handful of stocks.

But it’s important to know what’s inside the package, if it’s a whole lot of the same industry, that’s not going to give you the diversification you’re looking for.

Top ISA investments on Freetrade.

Gemma Boothroyd

Freetrade Analyst

No place like home?

Our research found that confidence in UK equities could be finally turning a corner. 

Around 20% of the ISA investors we spoke to say they plan to increase their exposure to domestic assets with just 4% saying they would reduce exposure.

Maybe the UK market’s relatively cheap valuation is proving too hard to resist, or maybe the allure of US tech is waning slightly.

Whatever the reason, the UK seems to be back on the menu in 2022. Investors will still need to maintain that long-term view though. 

Leaving your money in a cash account is really just not an option for anyone hoping to generate meaningful returns. It doesn’t carry the same risks as investing but cash drag is real. 

Inflation might concern some investors but that should make them look at their assets and how well-prepped

their companies are to take charge of their own destiny regardless of what’s happening in the global economy.

Dan Lane

Senior Investment Analyst

Freetrade’s top ISA tips

Check on your cash

Inflation is constantly eroding the value of what you can buy with your money, so scrutinising what you hold in cash and whether it should really be in cash is a good first step.

We tend to think about cash as something set aside for a rainy day and money that you’ll need to use in the next few years.

Set your goal

As we saw earlier in the research from houses, to retirement or holidays, people invest for all different reasons. Knowing what and why you are investing is an important first step, because it will help you decide how much and what you invest in. Without a goal in mind, you could end up taking on too much risk or losing money that you can’t afford to lose. Start with a plan.

Diversify, diversify, diversify

When you invest over the long term (we’re thinking in decades) your investments (just like you) will live through different times. To give yourself the best chance of growing your savings over the same time frame, it’s important to build a portfolio that could do well in different times too. Investing in funds such as ETFs or investment trusts can be a way to do this in one go or without having to choose the stocks yourself.  

Make it a habit  

This is the easy bit. After making the most of your current ISA allowance, it’s time to do it again next tax year.

Freetrade's investment principles.

Important information

ISA £50 Free Share offer, terms and conditions apply. To be eligible for the ISA offer you must deposit at least £1,000 into your ISA or start an ISA transfer worth at least £1,000. Transfers must complete by 17th May 2022 to qualify. See full T&Cs

Eligibility to invest into an ISA and the value of tax savings both depend on personal circumstances and all tax rules may change. This article is based on current rules, which can change, and tax relief depends on your personal circumstances.

This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. Before transferring an ISA you should check you will not lose valuable guarantees or be charged excessive transfer penalties.

When you invest, your capital is at risk. The value of your portfolio, and any income you receive, can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future results. 

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When you invest your capital is at risk.