Students beat UK savers


Daniel Lane - Fidelity Personal Investing

31 August 2018

It’s 10 years since my freshers’ week and I couldn’t be more jealous of everyone starting uni and heading back after the summer.

I remember a long-haired and altogether more energetic version of myself having a great time so best of luck to all the students out there, wherever you’re off to. I also recall, after a week of togas, body paint and society sign-ups (I never did get to FrenchSoc), one of the biggest worries I had was how to make my loan last until Christmas.

Over the next month a host of online money pages will be filled with personal finance advice for people just like 18-year-old me but it turns out this year’s cohort might already have a good idea of what they’re doing.

A survey conducted this week by The Money Advice Service suggests young people are more clued up on money management than we think. 73% of students responding to the survey said they were confident handling their own money affairs, with 83% regularly keeping track of their personal expenditure. What’s more, 33% said they could pay an unexpected bill of £300 within a week without dipping into their savings. I wonder how many graduates could say the same.

With personal finance education only creeping into the National Curriculum in 2014, it’s surprising to see such high levels of engagement and competence especially given university is often the first real instance of fiscal responsibility young people face.

But perhaps the most interesting finding was that 77% of students surveyed said they have a savings pot ticking over in the background, most commonly in a savings account (46%) or  an ISA (26%). With 72% of UK adults holding any type of savings account, students certainly can’t be accused of frittering away their last penny in the union.

Saving or investing?

It’s tempting to put off saving until it feels a bit more comfortable but it’s here that students are really doing themselves a favour, and showing the rest of us how to do it. Getting the ball rolling on generating compound interest is the single best thing you can do to help generate higher long-term savings. It’s unclear what percentage of student savers are using investment ISAs but with interest rates on cash ISAs at record lows, it can pay to let the market do the work.


As the chart above shows, with simple interest, a set amount of interest is added on every year. Compound interest keeps earning interest on the initial investment plus all the interest on the interest that has accumulated over time.

Company shares might carry more risk than cash but what we often forget is it’s the risk that creates the opportunity for growth. If I had the foresight to put £20,000 in a general FTSE All Share index fund 10 years ago I would now be left with over £44,000. Past performance is not a reliable indicator of future returns. The average UK savings account would have grown the same amount to £20,454 - with today’s young people facing sizeable house deposits and lengthy retirements that need funding that’s far too big a difference to ignore.

And while £20,000 might be a stretch for today’s students the point remains intact - save early, save often and if you’re happy to take some risk for the chance of more reward, think about investing. That first home or end of uni holiday might get that bit more achievable.

Find out more about investment ISAs here

Five year performance (Table needs to be inserted once available in Text component)

As at 31 July






FTSE All-Share 5.6 5.4 3.8 14.9 9.2







Past performance is not a reliable indicator of future returns

Source: Thomson Reuters Datastream, as at 31 July 2018. Total returns with income reinvested. Morningstar UK Savings 2500 index was used for cash.

Important Information

The value of investments and the income from them can go down as well as up, so you may get back less than you invest. Tax treatment depends on individual circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.