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Why to Invest

Please have a look at the two charts on the right. I will then explain what they mean and why we need to make changes to make our money grow.

The first chart is showing what happens with money in the bank if interest rates do not change. By 2026, 100,000€ today could be 109,369€.

Savings Over Time

The seconds chart is not a forecast. I cannot predict the return on a mix of investment types for the next 50 years. However, what this chart uses is the ACTUAL data from the last 25 years to show what could happen to the same mix of investment types in the future. It is real data, not a guess a from a fund manager or investment analyst. By 2026, 100,000€ today could be 221,935€.

Savings Over Time 2

You might like to compare this with the figure from chart 1. If you have good genes and live longer, say to age 99, the figures are 153,398€ and €1.511 Million. These figures are not just numbers, they do mean something real to us. Here is what a 100 year old client of mine said recently: “If I had just left my money in the bank I would have had to go into a care home years ago”. She became my client in her mid 70s. She also laughed when I told her that I had someone in their 50s say “I don’t want to invest for long”.

The last 25 years of data is a good period to choose, because during that time we have had the Dotcom bubble burst, followed by 9/11 and then the collapse of Lehman Brothers and the credit crisis. It therefore shows both real and bad events that affected investments. It puts the impact of those events in perspective. It shows real downside, and that you can live through it with a mix of investments.

Why are Bank Interest Rates going to stay very low for years? Here is why:

  • Scale of Debt in the World, Especially Government Debt
  • Lack of Inflation
  • Threat of Economic Downturn
  • Brexit

Yet that does not necessarily mean that other investments will do well. Just now, some rebalancing in the markets is likely. However, what will make a difference is the World is about to go through huge changes, thanks to a vast increase in computing power and amazing technological advances and discoveries. This will mean more profits for many companies. It has already started and is having a huge impact.

Here are examples of some of these advances that are already here:

The third fastest supercomputer in Europe1 is now doing in ONE second what it would take a human to do making a calculation every one second for the next 41.07 MILLION years. I cannot actually comprehend that number, but it is obviously stupendous. Due to these kinds of developments, medical research, mapping, designing of machines, cities, driverless cars etc can all happen much more quickly.

Increased Productivity is happening with Robots. They don’t need family holidays, lunch breaks or siestas. Robots have been working in the car industry for many years, but TODAY they are working in many other industries as well, from surgery and semi-conductor manufacturing, all the way down to bottling Cava2 and in Amazon Warehouses3. Automated production facilities make less mistakes, making them more efficient and therefore more cost effective for all types of companies in the long run.

Artificial Intelligence is being used in making more sales by being able to predict what we would like to buy4. It is also being used with natural voice recognition to replace customer service agents and to allow direct interaction between a customer and the company’s computer. I have seen excellent examples of this at work.5

Artificial intelligence has also resulted in cost savings for logistics chains, for example the platooning of lorries for fuel savings; but even more amazing, the dawn of the age of driverless ships and planes. Yes, they´re already here!

A driverless Japanese container ship is making its maiden voyage from Japan to North America right now6. Cost savings, when adopted across the container shipping industry, is likely to be billions of dollars a year.

In another example of cost savings, the Boston education authority, which transports 30,000 students on 650 buses to 230 schools, has just made a cost saving of $5million a year. This is bexause more efficient route planning using AI means driving one million miles less each year.

Put simply, these things mean more profits, which means better share prices.

Here are just two examples of how big this is going to be for the markets. Up to 5 Million businesses in the USA need batteries today, as they could get huge savings in peak demand electricity costs7. Who do you think will make these batteries, who installs them, who sells them? Another example: AI products will increase consumer demand by $9.1 TRILLION dollars and give Productivity Improvements of $6.6 Trillion, giving a total positive impact on the economy of $17.7 Trillion.8

These examples give us the ‘why’ of why we should not just leave our money in the bank. On the question of where to invest, well that is how I help. Your own personal circumstances and requirements are very important in deciding where and so a generic recommendation is inappropriate. However, please contact me for a no obligation discussion on how to make your money grow when interest rates are low and where to invest in the new technologies are changing the World we live in. The minimum investment is 50,000€.

     

     

     

     

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