Baby Boomers hold an average of five times more in ISAs than Millennials reports CapitalRise, an Innovative Finance ISA provider.
Data provided to CapitalRise by HMRC shows Baby Boomers (people born between 1946-64) with ISAs have an average of approximately £53,440 compared to an average of £10,670 for Millennials (1981-1996).
While not entirely surprising given their younger age, Millennials and Gen X (1965-1980) consumers have by far the lowest saved and invested in ISAs, with average ISA values of £10,670 and £25,440 respectively (which covers both stocks & shares and cash ISAs).
Despite being in their prime earning years, Millennials have an average ISA value only slightly higher than Gen Z. This suggests that this generation in particular is either struggling to save or is not choosing to fully utilise tax-free saving and investing opportunities.
The rising cost of living continues to put pressure on disposable incomes, so many Millennials and older Gen Z may be discouraged from saving or investing. However, even small contributions to an ISA can compound significantly over time, helping to build financial security in the long run.
Uma Rajah, CEO of CapitalRise, says: “This data reveals many Millennials are not saving or investing into ISAs as much as previous generations. Of course, many may not have the spare money to do so due to the continuing high cost of living – and have had less time to build up their ISAs compared to Baby Boomers – but it proves the importance of encouraging people to do so where and when they can.”
Many financial advisers are encouraging younger people who get taxed on their interest payments to take advantage of their ISA allowances in order to build their savings and investments for the long-term. By using their ISA allowance early, individuals can benefit from tax-free growth over time.
For those with a higher risk tolerance, they can consider investing some of their capital into Innovative Finance ISAs (IFISAs). The IFISA is a tax wrapper for money invested in certain alternative investments – such as property development loans, as offered by CapitalRise – and investors can earn tax-free interest on these property-backed bonds.
