Junior Isa investors are piling into cash despite concerns about rising inflation and low rates on cash savings.
According to data from HM Revenue & Customs, Junior Isas surpassed 1m subscribers between 2019-2020.
HMRC data showed the number of cash Isa subscribers increased by 1.2m - 61 per cent of all Jisa accounts - while the number paying into stocks and shares Isas increased by 300,000.
Holly Mackay, founder of Boring Money, said: “The data from HMRC is no surprise, with a surge in new investors seen over the past year.
“We’ve seen continued growth and do-it-yourself platform assets hit a record high in quarter one 2021, with more than 7m customers now on a DIY investing platform.”
She added: “The sharp increase in new people opening an account for the first time over the past year means that around one in 10 investors has now been investing for less than 12 months.”
However, cause for concern lies in the high amount of cash Jisas. According to Mackay, the figure of 61 per cent is the result of low confidence among Britain’s savers when opening investment accounts.
She commented: “Just 3 per cent of cash savers rate their confidence as nine or more out of 10 if they were asked to choose a new investment account.”
Earlier this month, FTAdviser reported on concerns that more people were turning to cash for their savings.
At the time, Tom Selby, senior analyst at AJ Bell, said although there was “of course nothing wrong with investing in cash Isas”, he warned the returns on offer “remain paltry” .
This is even more of a concern, with Bank of England inflation data today (June 16) showing inflation has breached the BoE’s 2 per cent target.
By comparison, according to data from Moneyfacts, cash Jisas open this tax year are offering interest rates between 2 per cent and 2.5 per cent.
Joy Brooks-Gilzeane is an intern with FTAdviser