Savers do not need to be reminded that, with interest rates at rock bottom levels, leaving cash on deposit in the bank is not going to be a rewarding experience. But Simon Ward, chief economist at Henderson Global Investors, has done a few calculations which he believes could drive savers to consider buying shares instead.
He has been looking at the dividend yield on shares – net of tax – versus interest rates on savings accounts and concluded that the gap between the two is close to a record, because interest rates are so low. He says, it could be enough to spark what he describes as a "great rotation out of cash into equities".
He warns, however, that small savers could lose some of their capital in the medium-term if they invest in shares.
