- The £1 coin first entered circulation on 21 April 1983.
- If you had put a shiny new £1 coin under the mattress on launch day, it would now have the same spending power as 22p back in 1983.
- If you’d put it in a typical savings account, it would have increased 740%.
- If you’d have invested it in the MSCI World Index, it would have increased 6,753%.
Sarah Coles, head of personal finance, Hargreaves Lansdown:
“Everything has changed beyond recognition since 1983, when the £1 coin was launched. Back then, mobile phones were the stuff of science fiction, nobody could imagine a world with more than three television channels, and the thought of having anyone other than the Queen on the coin was unthinkable. Now, so much has changed, including the spending power of £1.
Over 41 years, inflation has taken a toll, and impact of rising prices really adds up. If you’d put a brand new £1 coin under the mattress on the day of launch, by now it would have lost almost four fifths of its spending power. It’s a timely reminder of the toll that inflation takes on our money if it’s not working hard enough for us.
Easy access savings accounts are sensible homes for enough emergency savings to cover 3-6 months’ worth of essential expenses. However, it’s not a good idea to leave our cash in these accounts for the long term. In the years since 1983, it would have kept ahead of inflation until the financial crisis, and then fallen behind for the vast majority of the time since.
Of course, you can do far better if you track down the most competitive accounts on the market, over the periods that suit you best. Right now, the average easy access rate sits at 3.1% (according to Moneyfacts), but you can earn up to 5.2% in the most competitive accounts. When you’re shopping around, it pays to look beyond the high street giants to online banks and cash savings platforms, where you tend to get a better rate.
However, for money you don’t need for at least 5-10 years or more, these figures show just what a difference investment can make. If you’d invested your money in the MSCI World index in 1983, it would have increased by 6,753%. Over the short term, you would have seen its value rise and fall, but clearly over the longer term, it has the potential for real growth. It means often the best protection against inflation over longer periods is to consider a stocks and shares ISA.”
