Savers urged to do 1 thing to protect themselves from Rachel Reeves' Cash ISA raid

A finance expert has warned Brits of an important step to take to protect themselves from Rachel Reeves's raid on cash ISAs. ISAs, otherwise known as independent savings accounts, allow people to earn interest on their money without paying income tax up to a limit of £20,000.

Under proposals being considered,the Chancellor will seek to slash the threshold in order to help her fill the black hole left in the nation's finances followinglast week's welfare rebellion. Antonia Medlicott, Founder and Managing Director at financial education specialists,Investing Insiders, believes that savers should consider moving their money to the stock market if the policy is pushed through. She said: "Stocks and Shares ISAs have historically nearly always outperformed Cash ISAs, and there is too much-misconstrued fear around the risk of losing money.

"Most people avoid Stocks and Shares ISAs because they're nervous about the markets and don't feel they have the knowledge and education to approach it.

"However, despite the higher risks, if you can afford to look more long-term, this offers greater potential gains and has tended to yield higher returns than savers have been able to gain through interest on cash accounts."

The expert believes that investing in the stock market has the potential to return more money than interest in a cash ISA would.

She added: "The average annual return over the last 10 years for investments in the S&P 500 index, done through a Stocks and Shares ISA, has been 10.6 per cent.

"Meanwhile, for a Cash ISA account during the same period, there has been 2.57 per cent growth, and with the typical Cash ISA account holding under £13,500, this would return £346.95.

"If a Stocks and Shares ISA had the same amount of money, it would gain £1,431 in interest, an increase of more than £1,050. Over 20 years, this can be worth £78,833 extra from interest."

Amanda further warned that a lack of knowledge of the stock market is not necessarily something that should exclude people from investing.

She continued: "While a knowledge of investments can help make decisions easier when it comes to choosing what to invest in within a Stocks and Shares ISA, it isn't paramount.

"Providers offer ready-made portfolios from their experts, who will make the decisions for you.

"The main knowledge you need to be aware of is that, like with any investment, the value of investments within a Stocks & Shares ISA can fall as well as rise, and making money isn't guaranteed."

The threshold at which cash ISAs could be reduced to is yet to be announced, but the measures are likely to have a significant impact on the way in which people save money and invest.

The Chancellor is expected to give a speech at Mansion House on July 15 where it is likely that she will set out the government's growth and competitiveness strategy in financial services and potentially announce the controversial plans.