2 April 2020, LONDON –
If you had £1,000 to invest at the beginning of 2020, how would you have done so?
Personal finance comparison website, finder.com, has created an annual Investment Challenge that tracks how the most popular types of investments from last year are faring in 2020. By investing* £1,000 in each option, the aim is to help understand the markets and risk associated with different approaches, especially given the unprecedented disruption caused by coronavirus.
At the end of a turbulent first quarter in 2020, it is gold that proved to be the most successful investment of the year so far. Traditionally seen as a safe haven when traditional markets falter, a £1,000 investment in gold at the beginning of the year was worth £1,131.91 – a significant rise of 13.19%.
Narrowly behind gold, and in second place, was the US dollar. It rose 6.89%, giving a profit of £68, although this return halved within the last week.
In a break from tradition for recent market history, the humble savings account offered the third best return. While a 1-year bond with a market-leading rate of 1.8% would have made just £4.09 on a £1,000 investment so far this year, the fact the money is safe (and can’t go into negative territory) sees it come out comfortably ahead of traditional investing methods.
Similarly, while no financial expert would advise you to do nothing with your cash, “leaving it under your mattress” is actually one of the few methods in the challenge that is effectively immune to the financial disruption caused by coronavirus. As such, it was only 1 of 4 “investments” that hadn’t declined in value in 2020.
Bitcoin has seen a remarkable start to the year. As recently as 12 February it was up 47%, giving a year-to-date return of £477. However, it has fallen significantly over the past few weeks and was £40 down on Q1 – a decline of 4%.
The UK’s most popular fund of 2019, Fundsmith Equity, started the year well, but like the majority of stocks and funds, has followed the global markets downwards in March and was down 7.76% on the year.
However, this is significantly less than both Lloyds stocks and the FTSE 100 itself. The UK’s most traded stock of 2019 and the top 100 share index were down 48.8% and 24.8% respectively. Based on a £1,000 investment, this would leave you with a balance of just £512 if you had bought Lloyds shares, or £752.01 if you had invested in a FTSE 100 index fund.
To see the interactive chart, and to get more information on each investment, visit: https://www.finder.com/uk/investment-challenge-2020
Speaking about the findings, Charlie Barton, Banking and Investments Expert at finder.com said: “The market trends we have seen in 2020 show you exactly why all investments come with that cheery little tagline “Your capital is at risk”. Over time, of course, major indexes like the FTSE and a number of funds or ETFs tend to outperform savings accounts, but they come with a risk. Before you wade into investing, you need your own insurance policy, such as an emergency fund of 3 to 6 months worth of expenses.
“If you are likely to need money in these difficult times, it is a better option to put it in a savings account or a current account. While we are seeing extreme disruption to markets, it may be wise to hold any current investments and avoid turning a paper loss into a real one. The market is likely to bounce back, but we do not know how long it will take to recover.
“For those with disposable cash, the markets currently offer a great opportunity to buy stocks and funds at discounted rates. However, be wary. The period of economic uncertainty could rumble on for a long time and many firms may struggle to stay afloat as a result. As always, your capital is at risk.”
For the individual company share and fund, we selected the most popular choices in 2019 according to IG and Hargreaves Lansdown. For the savings account, we picked the most competitive 1-year rate available on our site as of March 2020. To replicate playing the lottery every week, we are randomising the numbers before each weekly draw.
*The £1,000 hasn’t actually been saved or invested in these methods, it is just being used as a way to illustrate the performance of each method.
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com's review pages for the current correct values.
finder.com is a personal finance website, which helps consumers compare products online so they can make better informed decisions. Consumers can visit the website to compare utilities, mortgages, credit cards, insurance products, shopping voucher codes, and so much more before choosing the option that best suits their needs.
Best of all, finder.com is completely free to use. We’re not a bank or insurer, nor are we owned by one, and we are not a product issuer or a credit provider. We’re not affiliated with any one institution or outlet, so it’s genuine advice from a team of experts who care about helping you find better.
finder.com launched in the UK in February 2017 and is privately owned and self-funded by two Australian entrepreneurs – Fred Schebesta and Frank Restuccia – who successfully grew finder.com.au to be Australia's most visited personal finance website (Source: Experian Hitwise).