Gold vs savings accounts across 10 years: Which performed best?

The experts at The Gold Bullion Company have analysed gold prices over time and account interest to compare how much profit you could earn by putting £1,000 into a standard high street savings account versus investing that same amount in gold, as well as sharing advice on what Brits should keep in mind before investing in gold.

You can view the full research here – https://www.thegoldbullion.co.uk/how-does-gold-compare-to-high-street-savings-accounts/

If you invested £1,000 in a traditional savings account back in April 2015, you’d have earned modest returns over the decade. This year, your savings account would be worth £1,180.84, a profit of just under £181 after 10 years.

Gold is a long-term investment strategy that has historically proven beneficial for patient investors. If you had bought £1,000 worth of gold in April 2015 (worth just under £971 when accounting for purchasing fees), your investment today would have grown to almost £2,978, even after paying the dealer’s fees included in selling gold.

Gold has a profit of nearly £1,978 over the 10 years, nearly 11 times the return of a typical savings account.

Rick Kanda, Managing Director at The Gold Bullion Company, has revealed the factors to consider before investing in gold:

“As promising as gold can be, it’s not without considerations. Like any asset, it’s subject to price fluctuations. There are also practical costs to consider. Secure storage, for example, usually costs around 0.65% of the gold’s value per year (plus VAT). Also, while we’ve included typical dealer fees in our calculations, you need to ensure you are buying from a reputable company to avoid impacting profits.”

“Different types of gold also come with different tax implications. Bars, coins, and jewellery can be treated differently in terms of capital gains tax (CGT) and VAT, so it’s worth understanding the ins and outs before purchasing. Britannia coins are a great investment to explore as they are VAT-free and offer tax-free gains for UK residents.”

“On the flip side, savings accounts also come with caveats. Many have enticing AERs and promotional periods, but only deliver if no withdrawals are made. Others cap the amount you can earn interest on. And while your savings are protected up to £85,000 under the FSCS, returns can be low and may be taxed depending on your income bracket.”

The research also revealed:

• According to the research, the high street savings account with the highest return was the Fixed Rate Cash ISA from HSBC. From a £1,000 deposit, HSBC’s ISA would generate £41 in profit, which beat the likes of Nationwide’s Flex Instant Saver (£30) and Barclays Reward Saver (£24.10). To put these figures into perspective, some accounts, such as Lloyds’ Standard Saver and Instant Cash ISA, would only generate £11.

• When comparing the above savings accounts to gold, there is one clear winner. In the same 12-month period, the price of gold increased by almost 32%. After taking into consideration dealer fees (3% on buying and 3% on selling), a £1,000 investment in gold would have yielded a profit of £249.82, resulting in an almost 25% gain in just one year.

You can view the full research again by clicking here