More than seven in 10 (71%) UK adults are still managing to save at least some money every month despite the current economic landscape, a new study from Aviva has suggested.

Aviva’s findings indicated that the average amount saved each month is around £194 per person, with most (37%) prioritising a “good return on their investment” over other factors.

Those who use ISAs as a vehicle for saving to take advantage of their tax allowances, tend to hold Cash ISAs (75%) rather than a Stocks and Shares ISA (18%), which Aviva suggested has been a steady picture across the market since ISAs were first introduced in 1999.

According to Aviva’s research – which was based on a study of 3,000 UK adults, of which 1,358 have an ISA – the bias towards Cash ISAs is partly because investors believe Stocks & Shares ISAs are “too risky” (19%). The findings also indicated that investors think it’s “easier to pay into the Cash ISA they already have” (15%), while one in nine (11%) “worry they won’t be able to withdraw the money if they need it”.

However, Aviva also warned that this reliance on cash could be costing savers hundreds of pounds every year.

With inflation hitting 6.2%, its highest level in 30 years, millions who have Cash ISAs or hold cash in their current account are now losing money month after month, in real terms. Aviva estimated that a cash amount of £10,000 in five years time might be worth only about £8,500 in today’s money, if inflation moves as predicted.

Aviva senior propositions manager, Richard Kelsall, commented: “It is more than 30 years since we last saw inflation at its current level and so for many, today’s rising prices are a distant memory and for some it is entirely new, uncharted territory. Clearly the cost of living squeeze means that not everyone can afford to save anything right now, but those with a little extra to spare can often make their savings work much harder for them.

“While it's always important for people to hold some form of easily accessible cash savings for day to day living and emergencies – many household essentials are at the forefront of inflationary pressures. Cash ISAs remain most popular amongst ISA investors, but they only provide savers with relatively low return.

“However, if an investor is looking to keep up with, or beat, inflation and willing to take a longer-term view they could secure a higher rate of return on their investment by looking at a Stocks & Shares ISA.”

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