Cash total returns: a long run index for DIY investors

If there’s one asset we all definitely hold, it’s cash. So it’s odd that there isn’t a long-run cash index available – one that we can use to compare other investments against.

Academics approximate returns to cash by resorting to treasury bill or money market rates. But what might a savvy UK investor have achieved with money in the bank?

Monevator is devoted to DIY investing after all, and so an everyday cash savings index would better reflect the experience of individual investors. It would also form a useful reference point for future expectations.

And so without further ado (I’ve always wanted to say that!) I present the Monevator cash total returns index.

A UK cash savings index

Our new cash index tracks the total return of UK savings accounts based on monthly interest rate figures going back to 1900.

I’ve relied upon three sources:

• Pre-November 1939: the Bank of England’s A Millennium of Macroeconomic Data.
• November 1939-March 2004: the Building Societies Association’s BSA Yearbook.
• April 2004-present day: Money Saving Expert’s amazing email newsletter archive.

My profuse thanks and additional hat-tips go to Monevator readers Alan Stocker, who suggested using the BSA and MSE sources, and Snowman, whose ongoing comments provided the motivational juice to plough through scads of dusty old interest rate records.

I’ll explain the decisions I’ve made in constructing the index at the end of the article. But first it’s high time I presented the facts on cash savings in the UK.

Spoiler: they’re not pretty.

The money illusion

The green cash uplands shown in the graph below represent the comforting sight of interest piling on interest. But the wavy red line that goes more or less nowhere is the return on cash after inflation:

Data from Millennium of Macroeconomic Data for the UK, ¹Building Societies Association (BSA) Yearbook, Money Saving Expert, and ONS. April 2026.

The annualised real return on UK cash savings is 0.1% for the period 1900-2025. Miserable!

It’s a performance that stacks up poorly against other mainstream asset classes:

• The money market annualised return is 0.4% (0.3% after fees)
• All stocks gilts is 0.8% (0.7% after fees)
• World equities is 5.6% (5.5% after fees)

In a nutshell, those returns and the chart above explain why we urge readers not to put everything into cash. The green stuff barely scrapes past against inflation over time.

Of course cash is not the worst place to be over some shorter periods, as we saw in 2022. And there are good reasons to always keep some readies in reserve.

However holding a large wedge will likely cost you as the years turn into decades.

The silent hissing of a slow puncture, or the quiet boiling of that unlucky frog come to mind.

Hard times

The next chart highlights cash’s longest losing streaks in real terms – including a 72-year whopper:

We’ve shared some godawful charts over the years on Monevator. But this one is right up there.

The red zones show you the length and depth of cash drawdowns, as viewed through inflation-adjusted googles. They demonstrate that cash can be a perilous place to store your wealth if you overly rely on it.

The same is true of all asset classes, admittedly. But cash is deceptive because it looks so stable in nominal terms.

However as the chart shows, cash can periodically inflict huge losses – and the culprit isn’t hard to find:

As we’ve all experienced lately, the cash-gobbling monster of inflation isn’t a blight that’s faded into history like smallpox, or grit in your codpiece.

Cast your eyes back to the cyan growth line in our chart above. Cash has only performed well in real terms over a few short periods: namely 1921 to 1933 and 1982 to 2008.

On both occasions you could have done better in bonds.

The not-so-flash crash

Here’s the full drawdown chart for cash’s nastiest ever bear market.

The record shows:

• Cash spent over 72 years in negative territory
• It took 48 years to sink to the bottom
• Losses peaked at -58% in April 1981
• The recovery took another 24 years until December 2005

Money markets experienced similarly severe losses. UK government bonds suffered an even deeper, if shorter, drawdown. (See our previous retelling of the tale of the UK’s worst ever bond market crash. Prepare a stiff drink.)

Essentially, successive UK governments failed to control inflation. That wrecked the real returns from fixed income assets.

The red gouge above partly explains why my grandparents – born around 1910 – were so hard up. All they had were savings with the Post Office. But whatever they put away was murdered by inflation. Especially in the early 1940s, the early 1950s and, most savagely, in the 1970s.

Yet go back to the first chart in this article and cash’s nominal return curve betrays no hint of these losses that lasted a lifetime.

Cash after the Global Financial Crisis

Let’s fast forward.

The competitive savings market we enjoy today was unknown to previous generations.

British savers had few options until the cosy arrangements of our banks and building societies were broken up by deregulation from 1987 onwards.

Two decades later, the retail savings market was flourishing on the eve of the Credit Crunch, as documented by Money Saving Expert’s empowering weekly emails.

Easy-access rates topped 6% as the first rumbles of the oncoming storm rolled across the consumer landscape in 2007. ²

But within a few months, Britain experienced its first retail bank run in 140 years. Keystone institutions teetered, and the economy locked-up.

The Bank of England cut rates to historic lows, and real cash returns fell into the red:

Since January 2009, cash has been under water for all but one month up to the time of writing. That’s 17 years of drawdown and counting.

The chart shows that cash wasn’t a save haven either when interest rates were slashed to near-zero, nor when they rebounded post-Covid.

Indeed, the jagged plunge to the latest cash trough (-15% in May 2023) was a direct consequence of the 2021-23 inflationary surge. The only good thing about cash during the recent cost-of-living crisis was its drawdown wasn’t as bad as bonds.

Frankly, neither cash nor bonds are the place to be when inflation breaks loose.

Please read our previous hunt for the best inflation hedge for more.

Conflict of interest

Before I embarked on this project, I had thought a fleet-footed saver may have beaten money market rates. But the data says otherwise.

The next chart shows how British savers have mostly lagged the official Bank of England rate since 1900. (Money market returns usually track the central bank rate like a lovelorn teenager):

There’s a lot of economic history packed into this chart, but the takeaway is that savers have only outperformed the going rate during two eras.

One was upon the outbreak of World War 2 up until Churchill’s re-election as Prime Minister in October 1951.

The other shows up in the MSE era of consumer choice from 2004. Up until the Global Financial Crisis, the green cash rate tracks ahead of the red Bank Rate as savers were offered very generous terms – the likes of which haven’t been seen since.

The Bank Rate is then slashed from 5% in September 2008 to just half-a-percent by March 2009, as the scale of the crisis became clear.

Still, if you kept your job, a chunky rate tart’s premium emerged as different banks and building societies needed to suck in cash periodically to balance their books.

Switching to whichever institution was most in distress at the time was perhaps not my soberest ever financial move (reader, I was a rate tart) but hey, the British Government was playing backstop so it seemed okay.

In my view though, the savvy saver’s edge has hardly been worth the effort since 2022, though the premium perked up a little in 2025 – as you can see at the tail end of the chart.

Inside the cash total return index

There were a surprising number of decisions to make in assembling the index – specifically in the MSE-powered ‘best buy’ era.

The most important thing to say is that the index is composed of the compound interest rates for short-notice savings deposit accounts.

Up to October 1939 – We use the ‘Interest rate on sight deposit accounts’. The Bank of England defines a sight deposit account as:

…where the depositor has access to the entire balance of the deposit, without incurring any penalty, either on demand or by close of business the day following that on which the deposit was made.

November 1939 to March 2004 – Interest figures come from the rates on ordinary shares accounts provided by the Building Societies Association. An ordinary shares account was just a standard savings account accessible using a passbook. (Ask your grandparents. Or me! I had a Post Office passbook account from childhood until I looted it as a desperate 21-year-old trying to make rent.)

April 2004 to present day – The best interest rate collated by Money Saving Expert at the end of each month, provided the account fulfils the following criteria:

FSCS protected (or European equivalent schemes prior to Brexit).

95 days or less notice required. This provision bears comparison with historical treasury bill rates which are typically for 3-month bills.

Introductory rates are included so long as they last at least six months.

Exclusions:

Cash ISA accounts due to historically severe caps on balances.

Fixed term rates – these accounts are subject to interest rate risk.

Accounts that limit withdrawals to fewer than 12 per year or impose interest rate penalties for withdrawals.

Minimum deposit requirements of greater than £1,000 or a maximum balance of less than £85,000.

Current accounts, because they’re typically subject to restrictive terms and conditions including tight caps on bonus interest rates.

Exclusively postal or in-branch accounts.

Cash back bonuses.

Tax rates and fees as per standard practice for indices.

The notional saver

Indices by definition are based on a set of guidelines that simplify the real world in order to produce a snapshot of a market.

The Monevator cash total return index is based on what a switched-on UK retail saver could have earned on liquid cash savings from 1900 to the present day.

My notional saver paid attention to rates and moved their money to the best available product. But they did not use exotic or highly restrictive products.

They’re not the average saver, but neither do they have unlimited time and the motivation to pursue every savings avenue either.

Crucially, the index needs to be comparable with retail investment opportunities where an investor can commit almost as little or as much as they like to any given asset class.

For that reason, I’ve only admitted accounts that allow for low minimum balances and high maximum balances.

I’ve also ruled out fixed-term savings because they contain embedded interest rate risk. ³

In the modern era, financial institutions have come up with every wheeze they can think of to top the best-buy tables for long enough to hit their targets, whilst avoiding attracting so much cash that it craters their bottom line.

So I’ve had to filter out much of that fiendishness in order to balance out the features of a genuinely desirable cash product: liquidity, accessibility, and competitive interest rate.

Finally, I’m not making a claim about what any individual could have earned. The index is beatable if, for example, you took term risk at the right time, or used interest-boosting techniques like current account stacking.

(Current account stacking enables a saver to jack-up their return – and partially circumvent balance caps – by opening multiple accounts that pay sweet rates of interest on restricted amounts of cash. Perhaps you opened ten accounts, perhaps you opened 20. It was a viable strategy for juicing your cash returns in the ZIRP era. It didn’t move the needle as much as I hoped when I ran the numbers, though. But that’s another story.)

Alright, that’s it for now. I’m very much looking forward to the thoughts, reactions, and critiques of the Monevator Massive. And I reserve the right to adjust the index in light of any bright ideas you have!

Take it steady,

The Accumulator

1. Thomas R, Dimsdale N. 2017. “A Millennium of Macroeconomic Data for the UK.” Bank of England.[↩]
2. You could even bag yourself 8% on balances of up to £2,500 via an Abbey National current account.[↩]
3. That is to say, adverse interest rate moves will leave you stuck in an uncompetitive product from time-to-time.[↩]