Why is Investing Important?

Why is Investing Important?

Investing is a crucial step in building wealth in the long term and achieving financial independence or flexibility in retirement.

If you only leave your money in a savings account, you miss the opportunity to benefit from the growth of the economy and the markets. Because through investments, one's own capital can actively work for itself and participate in the performance of companies, real estate or other assets. But why is investing so important? One of the central answers lies in the effect of inflation and compound interest. 

Inflation

Inflation means that prices rise over time and the purchasing power of your money decreases. Money that is in a savings account today loses value year after year without investment. For example, 100 CHF will no longer be able to buy the same shopping cart in ten years. With annual inflation of 1%, your money will lose around 10% of its purchasing power in ten years. By investing in a targeted manner with the aim of a positive return, investors can offset the effects of inflation and maintain or even increase their purchasing power in the long term.

Opportunity Cost

Those who do not invest their money forego possible returns from "lost profit". Opportunity costs show how much potential asset growth is lost if capital is not invested, but remains in the account without interest, for example. This is a crucial aspect that is often underestimated. Only those who invest use the full potential of their money.

Compound Interest

The compound interest effect describes how income on capital increases exponentially over the years because interest earned is reinvested and thus earned interest again. Even small, regular savings contributions can build up considerable assets over years due to the compound interest effect. The longer the money is invested, the stronger this effect is. This shows why investing early is particularly beneficial.

Why It’s Important to Start Early

If you invest early, you can make the most of the compound interest effect – time is the most important "lever" here. If you start young, you can build up a large fortune over decades with small amounts. In addition, long-term investments create more risk-free space and flexibility for the future. An early start ensures more independence and promotes the implementation of individual investment goals. What do I have to consider when investing?