Cash ISA vs Stocks & Shares ISA Calculator 2026/27

A Cash ISA is a savings account with the interest sheltered from tax. The £85,000 FSCS deposit protection applies per banking licence, so your capital is guaranteed up to that limit. Right for:

• Emergency fund (3–6 months of expenses), short notice, no capital risk.
• Money you'll need within 5 years, house deposit, wedding, near-term purchase.
• Higher-rate taxpayers who'd otherwise pay tax on savings interest above the £500 Personal Savings Allowance.
• Anyone who simply prefers certainty over potential upside.

A Stocks & Shares ISA holds investments, shares, funds, ETFs, with growth and dividends sheltered from tax. Value can fall as well as rise. Right for:

• Long horizons (5+ years, ideally 10+) so short-term volatility has time to smooth out.
• Retirement-style saving where the goal is real growth above inflation, not capital preservation.
• Anyone using the ISA wrapper to shelter dividends and capital gains they'd otherwise have to track on Self-Assessment.

Over the past 50 years, a globally diversified equity portfolio has delivered around 5–7% real return (after inflation). Cash has generally lost ground in real terms over the same horizon.

How bad can it get? Broad global equity markets have historically fallen 30–50% in a severe downturn, and have sometimes taken several years to recover. Anyone who needed their money during that window crystallised the loss. This is why the horizon matters more than the headline return: money you might need within five years generally does not belong in equities.

Sequence-of-returns risk. The projection assumes a smooth annual return. Real markets are lumpy, and the order in which good and bad years arrive changes your outcome even when the average is identical. Treat the S&S figure as the middle of a wide range, not a target.

Different protections. Cash ISA deposits are protected by the FSCS up to £85,000 per person per authorised bank, and the capital does not fall in nominal terms, though inflation erodes its buying power. FSCS cover for investments protects you if the provider fails, up to £85,000. It does not compensate you for investments that simply fall in value.