Stocks and shares Isa sales have risen by more than half in 2014 compared with 2013, and younger investors are turning to the investment vehicles because of paltry interest rates.
Discount broker Willis Owen reports that the number of Isas taken out in the year so far is up 56 per cent on the same period last year. It has also seen 87 per cent more new clients.
A poll by the broker has found that some 60 per cent of people are feeling more confident about the economic outlook, making them more likely to invest.
However, research from The Share Centre suggests that people are looking to stocks and shares Isas because they have no other option to beat inflation.
While the average Isa investor is usually aged 50 or over, The Share Centre says younger people are increasingly likely to get involved in investing because of poor savings rates.
Some 41 per cent of investors aged under 35 have taken out their stocks and shares Isa only in the past three years. Two thirds blamed the ongoing record low interest rates for their decision to invest.
Jason Chapman, managing director at Willis Owen, hopes that as the economy continues to recover, people remain engaged with their finances.
'Isas are one of the few remaining tax breaks available to everyone. With just over a month until the tax deadline, people should make the most of their Isa allowance while they still can. Money hidden away in a low-interest savings account could be working harder in an investment Isa,' he says.
And the flexibility of an Isa can be seen clearly in the different ways the vehicles are being used. Where the majority (67 per cent) of over 55s use these savings to top up their pensions, younger investors are using them to focus on shorter-term goals such as buying a house, paying off tuition fees or even funding a holiday.