Cash savers have missed out on £165bn of returns this year when comparing cash interest with the return on global equities, according to a new report.

Despite high interest rates, cash has returned less than a third of the money returned by stocks and shares in 2024, according to the report from investment manager Janus Henderson.

The UK’s savers earned £58.6bn in interest between January and September, equivalent to an average interest rate of 2.93%.

In the same period, the FTSE All-Share returned 9.9% in a combination of capital gains and income, while the MSCI World returned 13.4%.

Over the last 30 years, cash and interest has lagged inflation by 3.4%, while global equities have risen seven-fold in real terms.

Cash savings have risen by £51bn so far this year, to reach £2.05trn.

Only £1 in £6 of cash deposited this year has gone into fixed term accounts. The rest is in instant access options, where rates are steadily declining. This means interest income is now falling and suggests the gap may widen further between cash and stocks and shares options like investment trusts, particularly over the longer term.

The report found that the 'cost' of keeping money in cash is not well understood by savers, with 44% of savers surveyed saying they believe cash is the best way to save for the long term. One in eight (13%) preferred equities, including investment trusts and mutual funds, and 5% government bonds, or corporate bonds.

When thinking about inflation, more people believed cash accounts would protect the real value of their nest eggs over the long term (18%) than shares or funds (15%), while 37% were unable to hazard an opinion.

Dan Howe, head of investment trusts at Janus Henderson Investors, said: “Cash savings are eroded in real terms by inflation and, as we have seen recently, are mostly sat in instant access savings accounts where interest rates continue to decline. Crucially, they tend to be outpaced by returns on equivalent equity investments, many of which also offer an additional dividend income.

“That is why understanding the cost of cash is so important. Beyond the recommended cash buffer, there are many opportunities for us to put our cash savings to work for us rather than letting them languish.”

• Opinium surveyed 2,000 UK adults between 29 October and 1 November on behalf of Janus Henderson Investment Trusts.