Experts reveal whether a ยฃ1,000 investment in gold or a high street savings account will generate more profit. So, which option comes out on top?
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 ยฃ1,000 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.
According to the research, the high street savings account with the highest return was the Fixed Rate Cash ISA from HSBC. From a ยฃ1,000 deposit, HSBCโs ISA would generate ยฃ41 in profit, which beat the likes of Nationwideโs Flex Instant Saver (ยฃ30) and Barclays Reward Saver (ยฃ24.10). To put these figures into perspective, some accounts, such as Lloydsโ Standard Saver and Instant Cash ISA, would only generate ยฃ11.
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 ยฃ1,000 investment in gold would have yielded a profit of ยฃ249.82, resulting in an almost 25% gain in just one year.
Rick Kanda, Managing Director at The Gold Bullion Company, has revealed the factors to consider before investing in gold:
โAs promising as gold can be, itโs not without considerations. Like any asset, itโs subject to price fluctuations. There are also practical costs to consider. Secure storage, for example, usually costs around 0.65% of the goldโs value per year (plus VAT). Also, while weโve included typical dealer fees in our calculations, you need to ensure you are buying from a reputable company to avoid impacting profits.โ
โDifferent 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 itโs 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.โ
โOn 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 ยฃ85,000 under the FSCS, returns can be low and may be taxed depending on your income bracket.โ
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