Why is Investing Important?

Why is Investing Important?

By investing wisely, you can grow your wealth, prepare for retirement, and gain financial security.​

Investing is the key to building long-term wealth and securing financial independence—including for retirement. Those who merely park their capital in a savings account not only forgo potential returns but often suffer a gradual loss of purchasing power due to inflation. Investing, on the other hand, means making your money work actively: You participate directly in economic value creation, whether through companies or real estate.

Why is this step essential today? The answer lies in the interplay of two powerful forces: inflation, which erodes the value of money, and compound interest, which drives exponential wealth growth.

Inflation

Inflation causes your money to lose value over time. Those who leave their savings in an account without earning interest suffer a gradual loss year after year.

An example: In ten years, CHF 100 will allow you to afford significantly less than today. Even with moderate inflation of just 1%, your money will be worth around 10% less in a decade. Investing is the only way to offset this.

Let's assume you invest your money and achieve a return of 3%, while inflation is at 1%. Although your account balance grows nominally by 3%, inflation 'eats away' 1% of that. However, the bottom line is that you are left with a real value gain of 2%.

The result: You have not only stopped the loss of value but can actually afford more than before. Your wealth has grown in real terms.

Opportunity Cost

First, money steadily loses purchasing power due to inflation. Second, you forgo potential gains - the so-called opportunity costs.

This term describes the wealth you could have built if your money had been working for you. Leaving money sitting in a non-interest-bearing account is therefore costly: Not only does it shrink in real terms due to inflation, but you simultaneously miss the chance to offset this loss with returns. Instead of building wealth, you fall behind financially.

Compound Interest

The principle is simple but powerful: Your returns - especially dividends and interest—are not paid out but are immediately reinvested. Consequently, these reinvested amounts generate new returns in the following year.

Think of it like a snowball rolling down a long hill: At first, it is small, but with every turn, it picks up more snow and grows faster. The longer the path (your investment duration), the more massive the avalanche becomes.

This is why the time factor is so crucial: Those who start early let this effect work for them the longest—and can thus build a substantial fortune even from small contributions.

Why It’s Important to Start Early

Now you understand why time is your most valuable ally when investing.

Those who start early use compound interest as a powerful lever to build substantial wealth over the years, even with small contributions.

Furthermore, a long time horizon offers greater security: Those who start young can simply ride out market fluctuations and crises instead of having to sell in a panic. This creates not only financial independence but also the freedom to shape your future on your own terms.