The earlier you start investing, the more likely it is that you’ll earn a positive return. In the past, to be assured of benefitting from an upward move in prices – when viewed over the entire term of the investment -- one had to look at investment horizons of 10, 15, 20, and ideally 30 or 40 years.
In any case, there’s also what’s known as the compound interest effect. This magical effect unfurls when investment is made over the long term and on a regular basis (see tip in the box above). This compounding effect applies when, over the course of the entire investment term, any gains are immediately reinvested. Reinvestment funds take advantage of this effect, continuously reinvesting any gains that are realized.
Ideally, investing would begin when one begins working. A 16-year-old who invested 100 Swiss francs of their apprenticeship wages in a fund each month could amass almost half a million Swiss francs by the age of 65. Applying a historical average annual return of 7% in the stock market, and thanks to the effect of compounding interest, their total assets would amount to 472,043.25 Swiss francs. Of course, it’s not clear whether or when such returns will be repeated. It is, however, almost certain that anyone investing over the long term will be rewarded two-fold: through long-term rising prices, and through the effects of compound interest.