How investing changed over 30 years

The investment industry has gone through huge advances since the turn of the 20th century, when most people hadn’t sent an e-mail or text, let alone posted on social media.

Fuelled by innovation and technology – as well as evolving demand – the world of investing has developed to enable investors to seize far greater control of their money than ever before.

We look at how things have changed over the past 30 years.

How investing has changed since 1993

Looking back to 1993, investors wanting to buy or sell shares would need to speak to a stock broker on the phone.

The commission rates for buying and selling stocks were fixed – and pretty uncompetitive.

If you wanted to invest in a pooled fund, you’d do so directly with the investment company, or via a financial adviser. Information was scarce for the average person on the street.

With an increase in the use of computers in the late 80s and early 90s, online trading platforms emerged, as well as fund supermarkets, albeit in very early form.

As technology continued to improve, investing became much easier and more and more information became available.

Fast forward 30 years and today, investors can get information about any stocks, funds, investment options, brokerage firms and fees within minutes. 

Most brokers have developed online platforms and apps that provide investors with information about real time stock prices, news alerts, commentary and analysis.

In fact, DIY investors can access stocks and funds in any corner of the world at the touch of a button – or screen.

Charles White Thomson, CEO of Saxo UK says: ‘Three decades ago, my mobile phone was the size of a brick, I paid 2 per cent to trade single stocks via an analogue phone and listened to my music via a Walkman and cassettes.

‘Now I can access 70,000 multi asset instruments via my Saxo account on my smartphone while listening to my music online for a fraction of the price.

‘Progress has been fast, and in the case of investments, vintage isn’t always good.’

Investment trends 

The 1990s and early 2000s were arguably the era of the fund manager, with high profile actively managed funds run by star names shouldering individual share investing out of the headlines.

Then in the 2000s, the rise of passive investing – initially tracker funds automated to mimic an index or group of stocks – gave way to a huge surge in demand and popularity for Exchange Traded Funds (ETFs). These investments offered investors liquid, low-cost investing.

In the 21st century, new trends started to emerge such as cryptocurrencies, sustainable investing and cyber security.

Changing investor behaviour has also given rise to Environmental, Social and Governance or ‘ESG’ focused investing. The environmental bracket would focus on a company’s approach to climate change, nuclear energy, becoming carbon neutral and toxic waste.

Social investment supports the core elements of a modern society, including treatment of staff and suppliers, and to what extent a company upholds labour and human rights.

Governance refers to the leadership of the business, diversity in the boardroom, matters of executive pay and company stance on shareholder rights.

Investing for good isn’t new, of course – it began with negative screening, excluding certain industries.

But investors are now more motivated to invest responsibly, which has triggered a huge number of fund launches – both active and passive – offering some level of ESG integration.

The popular stocks – then and now

In terms of UK stocks, 30 years ago, investors reaped the rewards from software firm Sage Group, recruitment business Hays, banking software group Misys and management consultancy Logica now owned – and rebranded – by CGI.

At the turn of the century there were bumper profits from British American Tobacco and your investment would have seen a return of 850 per cent had you invested in the noughties, while retailers like JD Sports would have given you a whopping 3,760 per cent return. 

Later came the success of the property portal Rightmove and housebuilder Persimmon and an investment in these stocks would have seen a performance return of 1,330 per cent and 868 per cent. These days, the money is on healthcare firms like AstraZeneca and miners like Rio Tinto and Glencore among others.

Across the pond in the US, popular names from the earlier years include Microsoft, IBM, AOL, Intel and Oracle. Today the names many investors seem to be focusing on include the likes of Amazon, Meta, Tesla, Nvidia and Netflix.

Pharmaceuticals are also extremely popular with investors, perhaps more so since the pandemic highlighted the importance of medical research.

Stock pickers favour Moderna, Pfizer and Warren Buffett’s US-based firm Berkshire Hathaway, which continues to perform.

Stock market performance

Over the last 30 years the FTSE 100 has risen 172 per cent, and produced a total return of 497 per cent, which includes dividends paid out and reinvested. For the FTSE All Share, prices have risen 201 per cent and the total return was 627 per cent.

In the US the S&P 500 index rose over 30 years and gave a total return of 1,558 per cent.

What’s next?

It’s hard to imagine how investing will change in the years to come. But as technology advances and the quality and quantity of information continues to multiply, the world of investing will continue to evolve.

Artificial Intelligence is likely to be used to take investing to the next level, particularly when it comes down to decision-making as it will be able to instantly process large amounts of data which we just cannot do right now, predicting future trends based on previous ones.

So watch this space.