High Interest Rates? Is Cash Now King v Equities v Property in 2023?

Published / Last Updated on 22/05/2023

We read an article last week on debating whether investors should now look to cash rather than equity/stock markets given interest rate increases across the UK, USA and Europe.

We decided to review longer term, historic rates and yields for cash versus equities and property.  We used various sources to get past records and averages across the UK and USA, that we now offer our findings here.  We have made some assumptions that dividends yield an average of 3.5% pa and that rental yields are at 6.0% pa, clearly both may be higher or lower depending upon the shares and property concerned.

We also used domestic stock markets (those that mainly trade locally as well as internationally) to offer a wider balance of both local and international trade, which better reflect collective funds that you would likely invest in via your individual savings account, general investment account, insurance investment bonds and pension schemes.


Inflation Average % pa

Cash - Central Bank Base Rates Average % pa

Equities Return Average % pa

Property Return Average % pa










Average Rate



9.07% less 2.0% Bank Margin

5.42% less 2.0% Bank Margin

8.9% growth + 3.5% Dividends

6.83% growth + 3.5 % Dividends

9.3% growth + 6% Rents

5.4% growth + 6% Rents

Time period used

40 years

60 years

45 years

50 years

40 years

100 years

50 years

30 years

Total Average

5.52% pa

3.80% pa

7.07% pa

3.42% pa

12.4% pa

10.33% pa

15.30% pa

11.40% pa

Various sources: Official Data, Bank of England, Federal Reserve, Office for National Statistics, Open Source Government, Halifax Property Index, S&P 500, FTSE 250.  All figures are approximate with our own assumed bank margin, dividends and rents.

Whilst all are subject to income taxes, although dividends taxation is lower than income taxes, we have not taken capital gains taxation into account.  Cash has no gains to pay, and given different levels of taxation for interest, dividends and capital gains taxes, even if you knock off say 10% or 20% capital gains tax for equities and 18% or 28% for capital gains tax for property investments, we still reach the same conclusions.

From the above figures, you can deduce that:

  • Cash tends to beat inflation over the longer period.  As does equity investment or residential property investment.
  • Equities outperform both cash and inflation over the longer term.
  • Residential property also outperforms both cash and inflation over the longer term.


The above figures still allow for stock market crashes in 1973, 1987, 1992, 2001, 2008, 2016, 2020 and 2022. 

Today, however, the UK homebuyer is forking out £286,896 on the average property.  That's a total increase of 7,000%, with house prices climbing by an average of 9.3% pa compound, or in straight line terms £5,336, every single year over the last 53 years.  The average house price in 1970 was £4,057 source Open Source Government.  The average price today £286,896 in April 2023, source Halifax Property Index.  That’s 70 times higher since 1970 or an average increase of 9.3% pa compound plus rental income.

  • We believe we should all have a spread of short, medium and longer term investments across all the above investment areas. 
  • Cash is not king but equally it is not dead.  Have cash holdings for your short term needs as well as an emergency fund and also to ‘ride out’ any stock or property market volatility as a hedge.
  • Equities and property deliver longer term growth and generally stable income streams.

We are not giving up our equities or residential property investments just yet.

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