Investing money instead of saving – why investing brings more in the long term

What happens if you leave CHF 10,000 in a savings account for 30 years – and what happens if you invest it in a broad range of shares?

People who want to invest their money are often faced with the question: save or invest? In this article, we compare the long-term performance of a savings account with the MSCI World equity index. You will find out why investing has historically enabled significantly higher returns, what role the time of entry plays – and why compound interest makes the difference in the long term.

World equity index beats savings account – a long-term comparison

Let’s assume the following scenario: Two people have 10,000 francs at their disposal, which they do not have to draw on for 37 years.

Person A, let’s call her Anna, decides on a safe investment in her savings account at the cantonal bank.

Person B, let’s call him Beat, makes a riskier investment in the MSCI World index using an exchange-traded fund (ETF).

The MSCI World tracks the stock market value of the largest 1,300 or so companies from 23 industrialized countries.

Over the 37-year period from 1989 to 2025, Anna will ultimately be able to withdraw around CHF 17,000 from her savings account. This corresponds to a nominal increase in value of 70 percent or an average annual return of 1.5 percent.

With a simultaneous inflation rate of 1.1 percent (annualized), Anna will only have a small real increase in value of just under CHF 5,000 after thirty years.

10,000 becomes 180,000 francs

The picture is very different for Beat: when he sells his ETF on the stock market after 37 years, he receives over CHF 180,000 into his account. This corresponds to an increase in value of 1,700 percent or an average annual return of 8.4 percent. Or more than eight times Beat’s original investment.

What seems incredible is easily explained. Three factors play a decisive role:

• the long investment horizon
• the relatively high returns on (ETF) equity investments
• the compound interest effect through the reinvestment of dividends

The uncanny power of the compound interest effect

If Beat had the dividends paid out to him and consumed them, his original investment would have grown to just over CHF 83,000 – less than half.

The different developments in value are due to the incredible power of compound interest. Albert Einstein is said to have once described the compound interest effect as the 8th wonder of the world.

In the long term, we are all dead

Now you may object that we are all dead in the long term or that a 37-year investment horizon is definitely too long.

Agreed. So let’s assume a second scenario, which envisages an investment horizon of only 10 years instead of 37.

In our opinion, this duration should ideally not be undercut when investing in shares.

In contrast to a savings account, shares can fluctuate very strongly in the short term. For example, the MSCI World Index suffered a price loss of over 40 percent in a single year (2008)!

Entry time influences returns

This brings us to the next tricky point: the (supposedly) right time to enter the market.

So let’s concretize our 2nd scenario further and let Anna (savings account) and Beat (MSCI World Total Return) invest their starting capital of CHF 10,000 in all possible 10-year periods since 1989.

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We also assume that both Anna and Beat leave the income in the form of interest or dividends in their investment. This means that both benefit from the compound interest effect.

As the chart above shows, the equity investment yields significantly more than the savings account, except for one period.

For Anna’s savings account, the period 1989-1998 proves to be the best with an average return of 3.28%. In contrast, the period 2013-2022 performs poorly – with a nominal increase of a measly 0.17% per year.

Beat, on the other hand, receives the highest annual return for his equity investment in the period 1990-1999: 15.14%. By contrast, the period 1999-2008 performed poorly, with a loss of 1.23% per year. The global financial crisis of 2008, triggered by a real estate crash in the USA, wrecked his performance shortly before the sale – exacerbated by the fact that he had invested at the dotcom peak in 1999 of all times.

It is also striking that the savings account no longer compensates for inflation from the period 2013-2022 – anyone who left their money in a savings account lost purchasing power in real terms in these years despite nominal interest rates.

Currency risks, product costs and taxes

For the sake of simplicity, we have not taken currency risks, product costs and taxes into account in the calculations.

As far as costs are concerned, there are generally no costs for savings accounts. In the case of equity investments, the annual fees (Total Expense Ratio / TER) are now close to zero due to the strong competition on the ETF market and are therefore also negligible.

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Conclusion

Glad you made it this far! Here is a summary of the most important findings:

• In the long term, equity investments yield much better returns than a savings account!
• The compound interest effect is particularly significant for equity investments and long investment periods.
• Equity investments are subject to much greater short-term fluctuations (risks) and are therefore only suitable for a longer investment horizon.
• The savings account practically does not fluctuate and is therefore suitable for a short investment horizon.
• The time of entry can have a strong influence on the return on an equity investment.
• However, there is no such thing as the “right” time to enter the market, and this can only be determined retrospectively. Therefore, our tip: invest regularly, e.g. monthly on a key date, hold for the long term and never engage in so-called market timing!

In the next blog post, we’ll take a closer look at the investment topic and address the question of which factors are decisive when investing money.

You can get a complete overview of the topic of “Investing” here: Learning to invest – in eight lessons.

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Updates

2026-03-05: Text and data updated.

Disclaimer

Disclaimer: Investing involves risks of loss. You must decide for yourself whether you want to bear these risks or not.

Errors excepted: We have written this article to the best of our knowledge and belief. Our aim is to provide you as a private investor with the most objective and meaningful financial information possible. However, should we have made any errors, forgotten important aspects and/or no longer have up-to-date information, we would be grateful if you could let us know.