Are you using a Cash ISA to beat the State Pension? Please read this

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Image source: Getty Images Enter Your Email Address Rupert Hargreaves | Sunday, 12th January, 2020 Are you using a Cash ISA to beat the State Pension? Please read thiscenter_img I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Simply click below to discover how you can take advantage of this. Interest rates are not expected to rise significantly in 2020. As such, the returns available from Cash ISAs and savings accounts could continue to be very disappointing.This is terrible news for investors who are using the Cash ISA to try to beat the State Pension. For the past few years, Cash ISA returns have lagged inflation, meaning that any money stashed inside one of these tax-free wrappers is losing purchasing power and not growing in value.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Therefore, any investors who are relying on a Cash ISA to supplement their retirement income could be sorely disappointed.FTSE 100 stocks could offer a much better alternative, instead of owning a Cash ISA. Not only does the FTSE 100 support a higher dividend yield than the interest rate provided by most Cash ISAs today, but the index also offers capital growth potential in the coming years, that may help to improve your financial future.Inflation protection An interest rate of 1.36% (the best Cash ISA deal on the market at the moment) might not seem like a bad return at first, but with inflation expected to be around 2% over the long run, the real (inflation-adjusted) returns on your capital could be negative.An inflation rate of 2% and an interest rate of 1.36% implies a real return of -0.64% per annum. Ouch.The interest rate situation could become much worse before it becomes better as economic risks such as Brexit continue to cause the outlook for the UK economy to be uncertain.The FTSE 100 is not immune to economic uncertainty, but it does offer the prospect for much better returns over the long run. Over the past 30 years, the index has produced an average annual return of around 9%. Its global diversification and exposure to different sectors and industries have helped the index ride out economic turbulence.As such, buying the FTSE 100 may be a better option for investors over the long run.The numbers tell the story A saver who puts away £100 a month from 30 years of age and intending to retire at age 65, would have just £44,500 saved at the time of retirement at an interest rate of 1.36%.That is excluding the impact of inflation on returns. However, if the same saver invested their hard-earned cash in the FTSE 100, they would be able to look forward to a pension pot of £185,000 at the time of retirement.Considering the index’s performance over the past three decades, this trend looks set to continue in the long run. As a result, it makes sense to switch your capital from a Cash ISA to a low-cost FTSE 100 tracker fund.As the figures above show, long-term investors should benefit significantly from owning the UK’s leading blue-chip index over a low return Cash ISA, even though the prospect of owning cash might seem more attractive in the short term. Our 6 ‘Best Buys Now’ Shares See all posts by Rupert Hargreaveslast_img

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