Simplewealth Blog

Why invest?

One of the most common question we have at Simplewealth is: "why shall I invest my money in the first place?"

After all, instead of investing, you could simply leave it in cash.

The good thing with cash: it's always there when you need it, on a savings account.

The trick with cash is:

It does not generate return i.e. it does not grow

It's harder to resist a spending urge with liquid cash

It can depreciate or disappear with the bank hosting it

Cash does not grow

Overall, markets grow fast. Thomas Piketty in The Capital in 21st century explains that returns from capital are growing way faster than revenues from work.

This is due to the structure of the capital markets: indices have a "survivor bias", i.e. the companies whose market cap decreases are taken out and the bigger ones are getting in.

Thus, over the long term, stock indices in Europe, in the US or in Switzerland have grown way faster than inflation and revenues from work.

And if you want to buy a house in a few years or save for your retirement, investing early on by yourself or with a service like Simplewealth, means reaping the compound benefits from several years of market growth.

It's harder to save with liquid cash Studies show that illiquid assets avoid "impulse spending" and enable a better discipline.

It can depreciate or disappear with the bank hosting it During the financial crisis, in other countries, like Cyprus, cash had to be removed from bank accounts as state needed to save its banks.

When you own a stock or an ETF, it cannot be taken from you.

At Simplewealth, we believe investment should be made easy and a larger number of individuals should be able to benefit from tailor-made portfolios of ETF.

You can take a first look at your profile, for free, here