Investment education - Cash isn't always king

Cash isn't always king

31/08/2018 | Zurich Life


Over the last number of years, returns from investments such as equities and bonds have far exceeded that of cash. That is why we see more investors once again looking at alternatives to holding money on deposit.

The graph above shows how one of our managed funds has outperformed cash over the past five years. It is important to be aware that investing in other asset classes, such as equities and bonds, carries the potential for higher returns than cash, but it also carries the risk of higher losses to your investment.
Beware of inflation
In this low interest rate environment, deposit returns can be at near zero – which is even below the rate of inflation. This means that over time inflation is eroding the value of your money. The chart below illustrates how the purchasing power of your money can decrease over time. 

Even at an inflation rate of 2.5%, assuming no interest return for 
simplicity, €100,000 will be worth the equivalent of €53,939 in 25 years’ time in terms of purchasing power. A low interest rate environment means little expected return on savings held in the bank.
Warning: Past performance is not a reliable guide to future performance.
Warning: Benefits may be affected by changes in currency exchange rates.
Warning: The value of your investment may go down as well as up.
Warning: If you invest in these funds you may lose some or all of the money you invest.

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