The FTSE 100 Has Hit 9,000 But Are Savers Missing Out?

After more than four decades, the FTSE 100 has broken through the 9,000 barrier - a record high that reflects not just a market milestone, but a moment to pause and consider where your money is working hardest for you.

This development has arrived at an interesting time: while markets move higher, the new Chancellor, Rachel Reeves, is reviewing how savers can use their ISA allowance. There’s talk of capping how much can be placed in cash ISAs to encourage more investment into UK companies via Stocks & Shares ISAs.

With inflation gradually falling, interest rates expected to trend lower, and a new government focused on growth, many are asking: should I still be holding so much in cash?

A Historic First: FTSE 100 Tops 9,000

This month the FTSE 100 closed above 9,000 for the first time in its 41-year history. The index, composed of the UK’s largest publicly listed companies, has risen more than 10% year-to-date, buoyed by:

• Sterling weakness (supporting exporters and global earners)

• Gains in banking, defence, and mining sectors

• A relative shift by global investors back toward UK equities, which had been overlooked in recent years

This move in the FTSE comes alongside broader global market momentum. In the US, the S&P 500 has now notched 10 new record highs in the past 19 trading days, powered by strong earnings from major tech firms like Alphabet and Intel, as well as optimism around artificial intelligence. Meanwhile, hopes for a US–EU trade agreement (following recent progress with Japan) have helped boost market sentiment further. As the world’s largest economy shows signs of resilience, and with trade tensions easing, investors globally are finding renewed confidence in equities.

FTSE 100: April 1984 to Present

What’s Happening with ISAs?

Under current rules, savers can split up to £20,000 per tax year across Cash and Stocks & Shares ISAs however they choose.

But that flexibility may not last.

Rachel Reeves and the Treasury are reportedly exploring reforms to limit Cash ISA contributions to around £4,000–£5,000 per year, with the remaining allowance only usable in Stocks & Shares ISAs. The proposal forms part of a broader strategy to get more of Britain’s savings, estimated at over £300 billion in cash ISAs alone, flowing into listed UK companies to support growth and revitalise the London Stock Exchange.

While the government has temporarily paused these plans following backlash, the direction of travel is clear: a push away from passive saving and toward long-term investing.

Cash vs Stocks: How Do Returns Compare?

It’s easy to think of cash as “safe” and in many ways, it is. It protects against market swings, offers immediate access, and provides certainty. But over time, inflation erodes spending power, and the opportunity cost can be significant.

Take a look at the chart below, which tracks the performance of a range of asset classes since January 2000:

Source:

A – MSCI ACWI GTR in GB [474.11%]

B – FE UK Property Proxy GTR in GB [206.36%]

C – FTSE Actuaries UK Conventional Gilts All Stocks TR in GB [128.03%]

D – UK Consumer Price Index TR in GB [90.63%]

E – Bank of England Base Rate TR in GB [83.73%]

Data from FE fundinfo, 31/12/1999 – 30/06/2025

Despite short-term fluctuations, the long-term picture is clear: global equities (line A) have dramatically outperformed cash and other traditional assets over the past 25 years, delivering growth of over 470%.

In contrast, cash (line E), represented by the Bank of England base rate, returned just 83.73% - not enough to keep pace with inflation, which rose by 90.63% over the same period (line D).

While gilts and property offered better returns than cash, they still trailed far behind equities. This highlights a fundamental point: holding too much in cash over the long term may feel “safe,” but in real terms, savers can actually lose value.

For those with longer time horizons, investing in a diversified portfolio of equities has historically offered a far greater chance of growing wealth and staying ahead of inflation.

What Does This Mean for Savers?

Everyone’s financial plan is different, and there’s no one-size-fits-all answer. But a few key points are worth considering:

• Cash still plays an important role, especially for emergency savings, short-term goals, or low-risk appetites. But holding too much in cash for too long can quietly cost you.

• Market volatility is normal. Long-term investors are usually rewarded for staying invested and diversifying across sectors and geographies.

• Policy could influence your planning. If ISA rules change, it may become even more important to think strategically about how and where you allocate your annual allowance.

What We Do at K2 Private Wealth

We help clients:

• Understand their ISA options and how to use the allowance effectively

• Build globally diversified portfolios tailored to their goals and comfort with risk

• Review and rebalance investments regularly to stay on track

• Use tools like smoothed funds, money markets, and risk-aligned portfolios to blend stability with growth

Our goal is to bring clarity and confidence to your long-term financial journey.

Book a Complimentary Portfolio Review

If you’ve been sitting in cash, wondering what to do next, or if you’re not sure how upcoming policy changes may affect your ISA strategy, we’re happy to help.

We’ll give you an honest view of how your money is working and where it might be working harder.