Slightly than put money into UK shares, in keeping with the Monetary Occasions, savers have determined to place £276bn into financial institution accounts that don’t pay any curiosity.

For my part, with inflation continually eroding the worth of cash, this isn’t a smart choice.

Folks most likely view it as a ‘risk-free’ possibility, believing {that a} financial institution or constructing society is unlikely to go bust. And even when one did, the federal government’s Monetary Companies Compensation Scheme protects deposits up to £85,000.

I believe these savers think about themselves to be risk-averse. Nevertheless it’s plain that the true worth of their money goes down. Certainly the purpose of investing is to try to develop your cash?

Even when the £276bn was redeployed into interest-bearing accounts, savers can be higher off.

Nevertheless, with my spare money, I favor to purchase UK shares.

Why’s that?

That’s as a result of historical past exhibits that it’s attainable to build up wealth by investing within the inventory market.

For instance, from 1 February 2020 to 31 January 2025, the FTSE All-Share index, which captures 98% of the worth of UK equities, elevated by 37.9%. This determine — equal to a median annual enhance of 6% — relies on all dividends acquired being reinvested.

A instrument on the Financial institution of England web site exhibits that, over the identical interval, the buying energy of the pound has been eroded by 24.6%.

Nevertheless, this analysis comes with just a few well being warnings.

There’s no assure that historical past can be repeated. Simply because the UK inventory market grew previously, it doesn’t essentially imply it’ll develop once more. As billionaire investor Warren Buffett as soon as stated: “If past history was all that is needed to play the game of money, the richest people would be librarians.”

And, as famous above, a few of the development of the FTSE All-Share index got here from the reinvestment of dividends. However because of the volatility of firm earnings, payouts can go down or be suspended.

Subsequently, investing in shares and shares isn’t risk-free.

The most important and finest?

My private desire is for FTSE 100 shares. In concept, resulting from their sturdy steadiness sheets and international attain, the earnings of those firms must be extra steady.

And most of them pay dividends.

Nationwide Grid (LSE:NG.) is a inventory {that a} cautious saver may think about.

That’s as a result of its share price tends to be much less unstable than most. Over the previous 5 years, its month-to-month beta has been 0.28. In different phrases, if the inventory market modifications in worth by 1%, Nationwide Grid’s share price will – on common – rise (or fall) by 0.28%.

And it gives a wholesome dividend. Over the previous 12 months, it’s paid 54.96p a share. This implies it presently (17 February) yields 5.7%. The typical for the FTSE 100 is 3.6%.

Nevertheless, the transmission and distribution of gasoline and electrical energy requires costly infrastructure. The corporate shocked buyers in Could 2024, when it introduced a £7bn rights problem.

It’s additionally regulated, which implies it has to fulfill sure efficiency targets. In any other case, it may face fines or different penalties.

Nevertheless it doesn’t face any competitors and — for over 20 years — has persistently elevated its dividend annually.

For these cautious savers who at the moment aren’t incomes any curiosity on their money, Nationwide Grid might be a UK share to contemplate.