There is a saying in the world of investment. Cash is king! In our investment approach, cash and cash flow generation, will always have an important role to play. Without cash, a company cannot pay its dividend and without increasing cash flow, it cannot grow that dividend. In that respect, cash is indeed king and it always will be.
But in other respects, cash’s crown has somewhat slipped in recent years. With interest rates collapsing in the aftermath of the financial crisis and staying at ultra-low levels ever since, returns on cash deposits are negligible.
Nevertheless, according to the Bank of England, a whopping £260bn is invested in cash ISAs in the UK! The cash ISA has been a very popular product for years – the ability to hide a chunk of savings away from the tax man every year has proved irresistible to thousands of investors, as did the ability to earn a reasonable level of tax-free interest. The money invested in cash ISAs remains tax-free – but these days, it is also pretty much return-free!