Stocks ISA vs Cash ISA: The Numbers in 2026
Verdict
At 7.0% equity return, stocks ISA produces £7,641 more than cash ISA over 10 years. Break-even equity return: 4.5%.
Confidence: High
Break point: Equity return must stay above 4.5% every year over 10 years.
The rate that changes everything
The gap between stocks ISA and cash ISA terminal value widens significantly over longer horizons — compounding is the deciding factor.
The break-even equity return of 4.5% is the critical threshold because it delineates the performance of the stocks ISA against the cash ISA; if the equity return falls below this rate, the cash ISA outperforms, making it the superior choice for investors seeking stability and guaranteed returns. Conversely, any equity return above 4.5% favors the stocks ISA, which, at a 7.0% return, generates an additional £7,641 over ten years, clearly demonstrating the potential for higher gains in a favorable market. Therefore, investors must focus on this break-even point to make informed decisions about where to allocate their funds for optimal growth.
Worked example
Worked example (illustrative): £5,000/year invested over 10 years. At 7.0% equity return: Stocks ISA = £69,082. At 4.5% cash ISA rate: Cash ISA = £61,441. Stocks ISA produces £7,641 more. Verdict: Stocks ISA wins. Break-even equity return: 4.5%.
When this flips
This flips only when equity returns must stay above 4.5% every year over the full 10-year horizon. If the horizon shortens or the cash ISA rate rises, the attractiveness of equity investments diminishes significantly.
What to do next
| Your situation | Action | Why |
|---|---|---|
| Equity return above break-even | Stocks ISA | Expected return clears the hurdle — compounding wins over the horizon |
| Equity return below break-even | Cash ISA | The certain cash rate beats the uncertain equity return at this level |
| Short horizon under 5 years | Lean cash ISA | Insufficient time to smooth equity volatility — certainty has higher value |
| Long horizon over 15 years | Lean stocks ISA | Compounding over a long runway makes the break-even much easier to clear |
Sources and provenance
Data as of: 2026-04-06
