Most Britons still prefer the safety of a Cash ISA over investing through a Stocks and Shares ISA. HMRC data shows that for every £1 invested in the stock market through an ISA, more than twice as much flows into cash instead.
That caution is understandable. But what often gets overlooked isn’t simply the difference in returns — it’s the point at which money starts generating more wealth than the investor contributes themselves.
When money really begins working
To explore this idea, I stripped out contributions entirely and focused on one simple question: how much of final ISA wealth actually comes from compounding?
The chart below models two savers starting with the same £30,000 lump sum — roughly in line with the average ISA balance. From that point onward, both contribute identical amounts over the following 20 years.
That means only one variable changes: investment return.
The blue line assumes a typical Cash ISA returning 4%. The green line assumes an 8% long-term return more consistent with stock market investing.
The difference is striking.
After 20 years, only around 37% of total wealth in the Cash ISA comes from compounding. At 8%, however, that figure rises to roughly 62%.
That’s the real lesson.
At lower returns, wealth remains driven largely by what the investor puts in. But at higher rates of compounding, the balance shifts. Over time, money begins generating the majority of wealth itself.
And that is arguably the point where investing starts doing the heavy lifting.
Chart generated by author
Quality compounder
One business that increasingly fits this idea of compounding is Experian (LSE:EXPN).
Unlike more cyclical businesses, Experian has built its growth around data, recurring relationships and platforms that become increasingly embedded inside customer operations.
That was evident again in FY26.
Organic revenue rose 8%, while earnings per share climbed 15%. Margins also expanded as cloud migration costs began falling and the growing scale of its platforms improved efficiency.
But what stands out to me is not simply growth — it’s the quality and consistency behind it.
Experian renewed 100% of its large North American strategic accounts, often on longer and higher-value contracts. Across credit, fraud, and identity, its platforms are becoming more deeply integrated into customer workflows, creating higher switching costs and increasingly predictable revenue.
Artificial intelligence is also changing the debate.
Rather than threatening the business model, management believes AI is increasing demand for trusted, regulated, and explainable data. That matters because over 90% of revenue still relies on proprietary data sets and decisioning tools that are difficult to replicate.
What could go wrong?
Competition remains intense and the shares aren’t cheap with a price-to-earnings multiple of 21, meaning expectations are already high. Regulation also remains an important consideration. As a business built around consumer and commercial data, the company operates in tightly governed markets where changes to privacy rules or data usage could affect growth.
Yet, for me, the attraction lies elsewhere.
The earlier chart showed how wealth creation accelerates when compounding is allowed to work uninterrupted. Businesses like Experian operate in much the same way — and it’s exactly why I continue looking for other companies with similar long-term characteristics.
Should you invest £5,000 in Experian Plc right now?
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Andrew Mackie does not hold any positions in the companies mentioned.
