Image copyright AFP/Getty Images Image caption Savings accounts could prove better than shares

Money in best buy savings accounts has fared better than the stock market over most investment periods since 1995, a study has concluded.

It found that investments in tracker funds would have lost money up to a third of the time.

But cash in a savings account always ends up higher than it started, said Paul Lewis, the author of the study.

"People who prefer the safety of cash can make returns that beat those on tracker funds," he said.

Total returns

The research by the presenter of BBC Radio 4's Money Box compared returns from a tracker fund - which follows the FTSE 100 share index - with cash that is moved each year into a best buy one year deposit account.

Savings accounts beat the tracker in the majority of five year periods beginning each month from 1 January 1995 to the present.

However over the full 21 years the tracker ended up producing a compound annual return of 6%, beating the 5% produced by best buy savings accounts.

"Over the longer-term shares are likely to do better but I wanted to find out when the boundary is," Mr Lewis said. "My research shows that it's only at about 18 years that the balance turns in favour of shares over cash."

Active cash

The traditionally held-view in the investment industry is that shares perform better than savings account over long-term periods. But Mr Lewis reckons that view is based on misleading data.

"I have long suspected that the merits of cash were underplayed by traditional research which compares poor cash rates with often exaggerated gains on investments in shares." he said.

His study has produced different results because it compared a real tracker fund including charges, used new data on best buy cash accounts which has never before been collated and moves savings once a year into the latest best buy.

Image caption Paul Lewis, author of the study

Mr Lewis calls that "active cash".

Investment experts were sceptical. "The idea of 'active cash', where savers continually move their money between best buy accounts, is a very appealing idea, but is difficult to achieve in practice," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

Patrick Connolly, a financial planner at Chase de Vere, said: "It's not practical to assume that you'll be able to instantly access the best paying savings account each year."

But Mr Lewis said savers need to simply switch to the current best buy one year bond when an existing one ends to be able to beat shares.

Short term

The experts said that over the short-term most people were likely to be better off keeping their savings in a decent deposit account.

"If you are investing over a short time period, certainly less than five years but arguably less than 10 years, then you should stick with cash," said Mr Connolly.

"This is because if you invest in the stock market and it falls in value, you will have little time to make back any losses."

Mr Khalaf agreed, saying: "Savers who want access to their capital within five years should not consider investing in the stock market because the risk of loss is too high.