ISA stats #2: Rise of the ISA
Each day this week, we're running through some of the statistics taken from research on ISAs by the Office for National Statistics.
Last time we looked at the contribution limits imposed upon ISAs. This time around, we're looking at how much wealth has been stored within ISAs each year.
The tax year of 2010-11 saw 15.4 million ISAs opened -- a million or so more than the 2009-10 tax year. Roughly 78% of these ISAs were cash-only accounts, and this proportion has stayed about the same over the last couple of years.
While the contribution limits have slowly but steadily risen, it's interesting to note the actual amount contributed has been increasing at a faster rate. Around £54 billion was put into ISAs during 2010-11 -- something like £10bn more than the previous year's total, with only roughly a million extra accounts open.
That £54bn contributed was represented by just over £38bn going into cash ISAs, and almost £16bn into stocks and shares ISAs. In fact, this £54bn figure meant that for the first time since 2001-02, contributions into stocks and shares ISAs overtook the amount put into personal pensions.
It's worth noting that there has been a much faster increase in average subscriptions year on year, culminating in an average of £3,508 during the 2010-11 tax year (£3,190 in cash ISAs and £4,613 in stocks and shares ISAs).
The wealth stored within ISAs makes for impressive reading. The total worth of all holdings (including previous PEPs and TESSAs) came to around £385bn at the end of the 2010-11 tax year -- an increase of £42bn from the previous year's figure of about £343bn. Cash-only holdings came to slightly over £192bn, up from the previous year's total of roughly £169bn.
Obviously, stocks and shares ISA funds are linked to the volatility of the stock market, and so their overall value is susceptible to higher peaks and lower troughs than their cash ISA counterparts, which, over the years, have shown a gradual increase in value. Cash ISAs are obviously suitable for the risk-averse but, with the right stock following thorough research, there could be much more money to be made in a stocks and shares ISA for the more adventurous investor!
Next time, we'll look at how the value of an ISA account correlates to the account-holder's income. If you have any questions about this article, let us know in the box below.