Martin Lewis shared some tips on his BBC podcast (Image: ITV)
Martin Lewis has shared some guidance around savings on his BBC podcast warning that people could be missing out on much better returns. He spoke about the different types of savings accounts and ISAs you can go for to build up your savings.
He highlighted a “big mistake” that people make when putting away funds. A new mum wrote into the show with a question as she wanted to buy some investments to build up savings for her new baby, so he could access them when he turns 18.
She asked the consumer expert what stocks and shares she should go for within a junior ISA wrapper. ISAs are entirely tax free, with no tax to pay on any interest earnings or investment growth within and ISA.
A worrying trend
In answering the question, Mr Lewis first set out a key principle for savers to note. He said: “When I look on my website, the vast majority of people who come to my junior ISA page are looking for the top cash junior ISA savings rates.
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“When we ask the questions about kids’ savings and investments, the vast majority of questions are about savings, not investments. That worries me.”
The expert went on to point out that over time, investments will perform far better than the interest rate on your savings. He said: “On the balance of probabilities, if you invest in a broad spread of assets over the long run, investments are likely to grow significantly faster than savings, many times faster.”
He provided some historical figures to show the difference. Over the past 10 years up to the end of 2025, if you had put £1,000 in the top savings account at the start and kept any interest earnings back in the account, your savings would have grown by £270. But to just keep up with inflation, you would have needed to earn £390.
Mr Lewis contrasted this with some tracker funds: if you had reinvested any dividends you earned, in a global tracker fund, you would have made £1,980, while in the S&P 500, you would have earned an impressive £3,790.
So you could have earned over £3,500 more if you had gone for the S&P 500 fund compared to keeping your funds in cash.
No guarantees
Mr Lewis explained: “Of course, past performance is no indicator of future performance. There are no guarantees this would happen again.
“There are also no guarantees that the S&P 500 would outperform in that period. But I wanted to give you, just a scale of the magnitude of difference of putting money in a broad spread of investments, compared to putting it in savings.”
Turning to the question from the young mum, Mr Lewis said junior ISAs are “absolutely ripe” for going for stocks and shares rather than cash savings, as you are naturally putting the money away over a long period, giving it time to grow.
Mr Lewis has consistently recommended only putting funds into investment-based accounts if you don’t need to access the funds for at least five years, so it has time to grow. The value of your investments can go down as well as up, so it’s important to have a long-term view, so your investments can grow and you can sell them at the right time.
