In a world with separation between wealthy and poor, global financial crisis, and ever changing financial landscapes it is no surprise that many investors remain cautious. There are many more factors to take in account, we are living longer, spending more and the emerging nations are developing fast. So do you save your money in bank accounts where returns are low but volatility matches or do you Invest and risk increased volatility, balanced with the opportunity of growth?
It is difficult to escape that banks have record low interest rates and inflation is increasing. This means that people keeping money in bank accounts get effectively poorer when they save rather than wealthier if Investing. We only have to look back in time to see that Investing provides greater returns than savings. If you had invested your money over a 20 year period you would have received the following annualized returns*:
With inflation running at an annualized 2.5% over the same period and the average investor making 2.3% the answer is obvious. The gap between rich and poor is increasing; a big factor is that those who Invest reap and those who keep in cash deflate. The choice is yours. Good luck.
*Based on a report from Dalbar Inc data correct as 31/12/2013.