Why invest?

14 Dec. 2020
Author
Mark Ainsworth

One of the most common questions asked at Simplewealth is, “Why should I invest my money at all?”

One of the most common questions asked at Simplewealth is, “Why should I invest my money at all?”

One of the most common questions asked at Simplewealth is, “Why should I invest my money at all?”

After all, instead of investing money, you can just keep it in cash.
The good thing about cash is that it’s always at hand in a savings account.

However, with cash, the following should be considered:
— Cash by itself does not generate income (i.e. does not grow);
— Harder to save on liquid money;
— Money can “depreciate” due to inflation;
— The cash in your bank account actually belongs to the bank – you are only entitled to this money;
After all, instead of investing money, you can just keep it in cash.
The good thing about cash is that it’s always at hand in a savings account.

However, with cash, the following should be considered:
— Cash by itself does not generate income (i.e. does not grow);
— Harder to save on liquid money;
— Money can “depreciate” due to inflation;
— The cash in your bank account actually belongs to the bank – you are only entitled to this money;
Cash alone is not profitable
Cash alone is not profitable
Cash doesn’t increase unless it has a high interest rate – but are there currently any high-interest Swiss bank accounts?

In general, markets can grow rapidly. Thomas Piketty explains in his book Capital in the 21st Century that capital incomes grow much faster than income from work / employment.

This is due to the structure of the capital market: indices tend to survive, that there are companies whose market capitalization is declining and larger ones enter the market.
Over the long term, stock indices in Europe, the US or Switzerland rose faster than inflation and job / employment income.

Investing early on on your own or through services like Simplewealth means reaping the cumulative benefits of several years of market growth.
Cash doesn’t increase unless it has a high interest rate – but are there currently any high-interest Swiss bank accounts?

In general, markets can grow rapidly. Thomas Piketty explains in his book Capital in the 21st Century that capital incomes grow much faster than income from work / employment.

This is due to the structure of the capital market: indices tend to survive, that there are companies whose market capitalization is declining and larger ones enter the market.
Over the long term, stock indices in Europe, the US or Switzerland rose faster than inflation and job / employment income.

Investing early on on your own or through services like Simplewealth means reaping the cumulative benefits of several years of market growth.
Harder to save on liquid money
Harder to save on liquid money
Research shows that illiquid financial instruments allow “impulsive spending” and allow more disciplined work to achieve their investment goals.
Research shows that illiquid financial instruments allow “impulsive spending” and allow more disciplined work to achieve their investment goals.
Money may depreciate due to inflation
Money may depreciate due to inflation
Cash can be depreciated due to inflation. Inflation means a general rise in prices and a decrease in the purchasing value of money. If the purchasing power of your money decreases, then the value of that money decreases. To remain neutral, you must receive interest at least as high as inflation.
Cash can be depreciated due to inflation. Inflation means a general rise in prices and a decrease in the purchasing value of money. If the purchasing power of your money decreases, then the value of that money decreases. To remain neutral, you must receive interest at least as high as inflation.
Cash in your bank account legally owned by the bank
Cash in your bank account legally owned by the bank
Cash in your bank account owned by the bank. When you deposit money into your bank account, you are effectively lending money to the bank for it to use as it sees fit. The bank has a contractual agreement with you to pay you money that is in your bank account.

When you own a stock or ETF, you hold it in your own name and you own it. The Guardian holds these shares for you and your benefit.
Cash in your bank account owned by the bank. When you deposit money into your bank account, you are effectively lending money to the bank for it to use as it sees fit. The bank has a contractual agreement with you to pay you money that is in your bank account.

When you own a stock or ETF, you hold it in your own name and you own it. The Guardian holds these shares for you and your benefit.
Simplify your investment strategy
Simplify your investment strategy
"Simplewealth", he believes that the world’s largest financial market is an ETF.
You can view your investment profile for free here www.simplewealth.ch
"Simplewealth", he believes that the world’s largest financial market is an ETF.
You can view your investment profile for free here www.simplewealth.ch
"Simplewealth", he believes that the world’s largest financial market is an ETF.
You can view your investment profile for free here www.simplewealth.ch
"Simplewealth", he believes that the world’s largest financial market is an ETF.
You can view your investment profile for free here www.simplewealth.ch
May also be of interest
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May also be of interest
See all Insights →
May also be of interest
See all Insights →
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Past performance is not an indicator of future performance. Unless otherwise specified, all return figures shown above are for illustrative purposes only and are not actual customer or model returns. Actual returns will vary greatly and depend on personal and market conditions.
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