Jasmine Birtles
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Cash ISAs Vs Gold: Which Is the Better Safe Haven for Your Money?
Ruby Layram
18th Mar 2025
If you’re wondering where to stash your hard-earned cash for maximum security and growth, you’re not alone. With economic uncertainty looming and inflation chipping away at savings, it’s natural to question whether a Cash ISA or gold is the better safe haven for your money.
We recently came across a great article, published by Bullion Club, that broke down the pros and cons of each savings method.
In this post, we will take a closer look at what they find to decide which is the best place to put your money!
You might also like: 6 Investments That Hedge Against Inflation
The Case for Cash ISAs
A Cash ISA is a tax-free savings account, meaning any interest you earn isn’t subject to tax. In the UK, you can save up to £20,000 per year into a cash ISA and get back everything that your money earns!
Sounds great, right?
But there’s a catch: your returns are tied to interest rates, and that’s not always a good thing.
How Have Cash ISAs Performed Over the Past Year? (March 2024 – March 2025)
Let’s take a look at how Cash ISAs have performed over the last year.
- Easy-access Cash ISAs: Around 4.5% interest
- Fixed-rate Cash ISAs (1-year term): Around 5% interest
Let’s put that into numbers. If you invested £10,000 in a Cash ISA:
- At 4.5% interest, you’d have £10,450 after a year.
- At 5% interest, you’d have £10,500 after a year.
Not bad, but is it enough?
The best way to decide is to look at these returns against the current rate of inflation. At the time of writing this post, inflation sits at around 3%.
So, it is possible to outpace inflation with a cash ISA. BUT, only if interest rates remain high!
For instance, in March of 2020, UK interest rates reached a record low of 0.10%- much lower than inflation! Savers who held their money on savings accounts during this time might have lost significant value.
The Pros of Cash ISAs
If you’re looking to earn stable, tax-free interest, cash ISAs are a pretty good option to consider.
- Low risk; Your money is protected, and returns are predictable.
- Tax-free growth: No tax on the interest you earn.
- Easily accessible: Withdraw funds without worrying about liquidity.
The Cons of Cash ISAs
- Inflation risk: If inflation is running higher than your interest rate, your savings lose value in real terms.
- Lower returns: Compared to other investments, Cash ISAs often underperform over time.
Now, let’s compare that with gold.
The Case for Gold
Gold has been a trusted store of value for centuries, offering protection against inflation and economic downturns.
But does it really outperform Cash ISAs? And, perhaps more importantly, inflation?
Gold’s Performance Over the Past Year (March 2024 – March 2025)
- Gold price in March 2024: ~£1,693 per ounce
- Gold price in March 2025: ~£2,345 per ounce
- Increase: Around 38%
If you had invested £10,000 in gold in March 2024, your investment would now be worth around £13,800.
That’s an increase of £3,800 compared to the £450–£500 from a Cash ISA!
The Pros of Gold
The ability to offer higher returns than a savings account isn’t the only reason that people love Gold.
- Strong returns: Over the past year, gold outperformed Cash ISAs significantly.
- Inflation hedge: Gold maintains purchasing power even when inflation rises.
- Safe-haven asset: Considered a Tier 1 zero-risk asset by the Basel Committee on Banking Supervision.
- High liquidity: Can be easily bought and sold.
The Cons of Gold
- Price volatility: Gold prices fluctuate, meaning short-term investors could see losses.
- Storage and security: Physical gold needs to be stored securely, which can add costs.
- No passive income: Unlike ISAs, gold doesn’t generate interest or dividends.
Gold vs Cash ISAs
| Investment Type | Interest/Growth Rate | Value After 1 Year (on £10,000) |
| Cash ISA (4.5%) | 4.5% | £10,450 |
| Fixed-Rate ISA (5%) | 5% | £10,500 |
| Gold | 38% | £13,800 |
The numbers don’t lie. Gold significantly outperformed Cash ISAs over the past year. AND, Gold has historically out-paced inflation, meaning that it is a stronger store of wealth.
Which Is Right for You?
So, should you put your money in a Cash ISA or Gold?
If you prioritize safety and accessibility, a Cash ISA might be the better choice. Your money is protected, and you’ll earn some interest while keeping your funds readily available.
However, if you’re looking for long-term wealth preservation and inflation protection, gold could be the smarter move. It has historically held its value over time and often rises when other assets struggle.
For a balanced approach, consider diversifying—keeping some money in a Cash ISA for short-term security while allocating a portion to gold for long-term growth.
Splitting your savings between gold and cash means that you get the best of both worlds – steady interest AND long-term growth.
Next Steps
If you’re considering shifting some of your ISA savings into gold, now could be the time to explore your options.
The Royal Mint offers gold coins that are capital gains tax-free, making them a tax-efficient way to invest in precious metals.
As always, do your research and seek professional advice to ensure your investment strategy aligns with your financial goals. Whether you choose gold, a Cash ISA, or a mix of both, the key is to make an informed decision that protects and grows your wealth for the future.
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Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence. When investing your capital is at risk.
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