£1000 Saved in Three Different Ways – The Results after Four Years

I started a financial experiment in collaboration with PensionBee on July 7^th 2020. The beginning of a new decade, during the first lockdown covid year, comparing the returns on different ways of saving £1000. I wanted to see in real £££ and % growth (or loss), how the savings were changing over time, and which savings pots grew the fastest or lost value. This was me putting my money where my mouth is, to show how savings compare and can rise or fall over the long term.

This experiment will continue for at least ten years. I’m excited to understand the level of growth in the long term, with different interest rates and market conditions. Each savings pot has a different time frame, risk level attached, and accessibility. I have money in cash, where returns have changed hugely over 2023 with interest rates increasing hugely. I also have money invested into a Vanguard Stocks and Shares ISA and PensionBee Fossil Fuel Free pension plan.

On July 7^th 2020 I saved £4000, £1000 in four different ways. I originally had £1,000 saved into a Marcus Instant Access Savings Account and another £1,000 saved into a fixed-term cash savings account from Zopa. In July of 2022, my fixed-term savings account matured, and I withdrew the money, removing these savings from the experiment.

My instant access cash moves around depending on the best place to earn interest.

These are the three places for my savings on July 7^th 2024.

1. Zopa Bank Smart Saver until Jan 2024, then Zopa Bank Cash ISA
2. Life Strategy 80% equity fund, Stock and Shares ISA with Vanguard
3. PensionBee Pension, Tracker fund until Dec 2020, then Fossil Fuel Free plan Jan 2021 onwards.

How have these three different savings methods performed over time and where is the best place for my money?

Immediate Access Cash Savings

My first £1000 is held in a Zopa Bank Cash ISA. This account has one of the better interest rates on the market, currently paying 5.08% on 7^th July 2023. This is a great, easily accessible place to keep all of my emergency cash savings. The money is available instantly if needed and held in a separate bank from my personal banking, hence creating a barrier of accessibility and making me less likely to dip into or borrow.

This is also where I keep all of my spare cash including my emergency fund to cover three months of my essential expenses. It’s also where I hold my company tax bill reserves.

In July 2020 when I first started saving this money, it was held in a Marcus Bank account paying interest at a ‘market-leading’ rate of 1.05%, my Zopa cash ISA is at 5.08% in year four. As we know with higher interest rates we can earn more money on our cash savings.

Cash	Jul-20	Jul-21	Jul-22	Jul-23	Jul-24	Total Growth
Value £	1,000	1,006	1,015	1,040	1,090	90
Annual Growth £		6	9	25	50
Annual Growth %		0.6%	0.9%	2.5%	4.8%	9%

My £1000 cash balance over four years has earned £90 interest.

A growth rate of 9% over four years or 2.2% per year.

No matter the return, cash is the ideal place to keep your emergency cash and short-term savings. In actual terms the money grows over time with the small amount of interest, it will never result in an actual cash loss, although with inflation as high as it was 7.9% in July 2023, 9.1% in July 2022, and now lower at 2% for July 2024 there are inflationary losses compared to interest earned.

Stocks & Shares ISA

My second choice of saving £1000 was investing in a Stocks & Shares (S&S) ISA with Vanguard (other investment providers are available, this is the one I choose due to lower fees). A S&S ISA is an investment product, not cash, meaning that it comes with the risk that my money can rise or fall in value, as it did in 2022. S&S ISAs are more suitable for medium-term investing where the money is held for at least five years or longer.

Within my S&S ISA, I invest in a balanced fund of 80% company shares and 20% bonds. The value of my investment increases if my funds go up in value or I make a loss if my investment fund reduces in value.

The money is accessible within a few days if you need it and to access your cash you will need to sell your investment. It is not suitable for emergency savings, as you might need that money when markets are down, and you may have lost money on your original investment. Always invest for the medium to longer term. You can invest up to £20k a year in a S&S ISA.

I put my £1000 investment in July 2020 into an 80% Equity LifeStrategy Fund.

S&S ISA	Jul-20	Jul-21	Jul-22	Jul-23	Jul-24	Total Growth
Value £	1,000	1,193	1,141	1,173	1,388	388
Annual Growth £		193	-52	32	215
Annual Growth %		19.3%	-4.4%	2.8%	18.3%	38.8%

My £1000 Vanguard S&S ISA has grown by £388 in four years.

The valuation at July 2024 being £1,388, a total growth of 38.8% or 9.7% per year.

I love analysing the performance of my S&S ISA over a longer period, the difference in annual growth is stark and in line with market conditions. The first and fourth-year growth figures are huge and just goes to prove you need to invest for a longer period. To get a 39% return after four years is so good and proves the validity of investing over cash savings.

Equally, my fund lost 4% from July 2021 to July 2022 as the effects of the lockdown, high interest rate and high inflation kicked in. That would have been a bad time to sell my investment.

The total growth over the four years is 38.8%, averaging out to 9.7% per year. The average prudent assumption that I always include in investment growth analysis is 5% per year so this current run rate smashed my assumption, maybe I can start using 7%! Data Sourced from FT.

Despite the fluctuations from year to year the average growth of 9.7% is hugely better than the cash growth of 2.2% per year. I am happy with this level of growth and intend to increase my savings into my ISA to £500 per month into my S&S ISA as part of my balanced savings strategy.

PensionBee Pension

My third choice of savings was to put £1000 into my pension with PensionBee. My private pension is an important long-term savings strategy, the State Pension is certainly not enough to live on, see my experiment where I lived off the State Pension for a week in 2021. At the beginning of 2024, Faith Archer and I attempted to live on the PLSA’s £246 minimum pension living standard, then a week of their moderate living standard at £448. Watch my summary on Instagram, it was HARD!

I am currently aged 47 and am unable to access this money until the age of 57 (this age increases from 55 to 57 in 2028, but the age might change again depending on government rule changes).

Pension savings, similar to the S&S ISA are invested into a fund of my choice within the PensionBee plan options. Initially, my pension was invested into the standard low-fee ‘Tracker’ fund, I moved this over to the Fossil Fuel Free plan when it was launched in January 2021. I am passionate about climate change and all things green and environmental. I know that moving my investment funds into fully ethical investing is the most powerful way of doing this. But does it offer great returns?

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Pension	Jul-20	Jul-21	Jul-22	Jul-23	Jul-24	Total Growth
Value £	1,000	1,231	1,237	1,340	1,626	626
Annual Growth £		231	6	103	286
Annual Growth %		23.1%	0.5%	8.3%	21.3%	62.6%

My £1000 saved into my PensionBee Pension has grown by £626 in four years.

The valuation at July 2024 being £1,626, a four-year growth of 63% or 15.7% per year.

Again, similar movements compared to the S&S ISA, as one would expect with both invested in the stock market. Although my pension has performed significantly better.

There was a significant growth during year one of 23%, not much movement in year two, 0.5% then another good amount of growth in year 3, 8.3%. This indicates that ethical, fossil fuel free investing has performed better than my LifeStrategy 80/20 fund which includes all industries.

The total growth over four years is a very impressive 63% or 16% per year, nearly double the growth of my S&S ISA and is many times higher than my cash savings. Of course, the disadvantage is that this money is locked away for at least eleven years when I turn 57.

In reality, I have my entire pension pot saved in the PensionBee Fossil Fuel Free plan and am super happy to see these significant returns between July 2023 and July 2024, particularly as I invested 40k into my pension in Dec 2022.

A worthy point to add to the pension value growth is the tax benefits of pension contributions. I make my pension contributions via my limited company, an allowable expense saving me 19% corporation tax. As a self-employed or employed person, you get tax relief at source, if you add £80 to your pension from a personal bank account, HMRC will usually add in another £20 in tax relief, all done via PensionBee.

This means a double win, brilliant growth, and tax-saving benefits. Of course past performance doesn’t guarantee future performance, the value of shares can go up and down.

Summary of Results

This is one of my favourite financial experiments and am grateful to PensionBee for collaborating with me on this content. This is such an interesting experiment to keep track of over the years, and based on the performance of the past four years I can see that the returns are much better than cash when I invest in my S&S ISA and much, much better when I invest in my Fossil Fuel Free Pension. This has a double-winning impact on me, not only am I getting a great return on my money in my pension and I am also doing good for the world by investing ethically in a way to help save the planet.

I will continue to track this performance for as long as Mrs Mummypenny is here (forever!) and will also continue to prioritise my overall pensions savings (of at least £1000 per month) and my S&S ISA savings (of £500 per month). My emergency fund remains in cash, but that stays at just the three months of essential expenses, which suits my personal attitude to risk.

Please be aware that any form of investment can go up and down. You may want to consider advice from a qualified IFA. Just make sure they come recommended by a trusted friend and check their investment levels.

This post was written in collaboration with PensionBee. Risk Warning

As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.