Some say that history can teach us only so much. Nonetheless, experience does show that funds investments have proven themselves, time and time again, as superior to cash savings in bank accounts, for those who can afford to invest with a medium-term investment horizon (i.e. 10 years or more).
The statistics are clear. Scottish Widows recently plotted the performance of a (hypothetical) long-term investment in stocks and shares made in 1945, and showed that returns on funds investments or a stock market investment, over a 60-year term, were 70 times greater than returns from a bank or building society account.
According to the Scottish Widows calculations, a sum of £100 invested in a building society account in 1945, and left there for 60 years, would have been worth just £1,767 by 2006. Invested in bonds, the same sum would have been worth £4,323.
However, the fund investment returns on the same £100 invested in the UK stock markets, as measured by the Barclays Equity Index (and with dividends reinvested), would have been £125,243 over the same time 60-year period.
While bonds may be attractive for an investment of 5-10 years, as you are told in advance what your minimum return will be, fund investment returns are clearly superior in the longer term.
The cyclical nature of a fund investment means that it is wise to take investments advice from an independent investment adviser, who can explain the risks involved in stocks investments for those who cannot commit for the longer term. By making an investment enquiry you can set up a fund investment that will set your cash working much harder for you than if invested in cash or near-cash products.
And with interest rates currently at an all-time low, seeking alternative investments for your savings cash may be a prudent strategy, to keep your money from losing its value due to inflation.
