The only way to have a chance to maintain your purchasing power is to “make your money work” by deliberately placing it with the aim of making its amount grow over time. This way to save is called “investing”.
Investing consists in placing money in assets – stocks, bonds, investment funds, real estate, even works of art or noble wines … – you believe will either generate regular income or increase in value or, ideally, both. If all goes well, you will be able someday to sell these assets at a higher price. The difference between the amount that you will receive and the amount you have invested is called return.
Unlike a placement in a savings account or a bank account where the interest you will receive is known in advance, an investment generally does not offer you a guaranteed return. The value of an asset may rise, but it can also decrease over time.
Any investment therefore carries some risk of losing money. In return, however, investments offer the chance to achieve a significantly higher return than would be possible with a savings or bank account. It is this chance that motivates people to invest.
The risks associated with an investment vary from one asset to another. So, before you decide whether you want to save your money or invest, you need to fix both your goals and the level of risk you are willing to accept to achieve them.
Find out more about this topic in our article “Know yourself before investing” in the section “Before you invest”.
