Savvy players quids in as pound stretches in shares
IT IS NOW 40 years since the £1 coin was introduced but time and inflation have taken their toll, as it is worth the equivalent of just 30p today.
That only applies if it was left in a piggybank or lost down the sofa, though. If invested in the right place it could be worth a lot more.
A pound coin left in an instant access account would have beaten inflation over four decades and would now be worth £3.75, or £1.14 in real terms spending power.
UK Government bonds, known as gilts, would have turned it into £7.03, or £2.14 in real terms, according to new research from investment platform AJ Bell.
Bricks and mortar remains rewarding as £1 invested in the average UK residential property would be worth £11.90 today or £3.63 in real terms.
The stock market has been the most dynamic investment of the last 40 years, with a UK equity income fund turning that £1 into £42.60. That is £12.99 in real terms.
It would have worked even harder in a fund investing in US technology, which would have turned £1 into £65.31, or £19.92 in real terms. That is despite last year’s tech crash.
These figures showed just how much damage inflation can do to the real value of money, but also the best ways to fight back, said Laith Khalaf, head of investment analysis at AJ Bell. “Riskier stock market sectors have beaten safe havens like cash, but with a lot more volatility along the way,” he said.
However a lower risk strategy can also pay off. “More cautious investors can still take heart as even less risky stock market funds have still beaten inflation, due to compounding returns over time,” Khalaf added.