Jan De Schepper is chief sales and marketing officer at Swissquote. In this interview, he answers questions about stock-based saving, and about the Invest Easy service from Swissquote.
Mr. De Schepper, which pays off more: saving, or investing in stocks?
Jan De Schepper: The data speaks very clearly. Over the long term, stocks perform much better than savings accounts. The main requirement is that you invest in the stock market in a well-diversified way. If you only select a few stocks, there is a chance that you will earn higher returns than you would with a broadly diversified stock portfolio. But the risk of is also higher: You could lose a lot of money by banking on individual stocks. That is why it is important to spread the risk.
Is stock-based saving a combination of saving and investing?
You could put it that way. When you use a conventional savings account to save, the risk of losing money is very small – at least if you do not account for inflation. But the tradeoff is that you hardly achieve an inflation-adjusted return, even over long terms.
With stock investments, including diversified investments using ETFs, there can be years in which your assets lose a lot of value. But over long terms, the chance of losing money with well-diversified stock investments is small, and the yields are much higher than those of conventional savings accounts. So it comes down to your investment timeframe. The longer you stay invested, the lower the risk of loss becomes.
Is now a good time to use stock-based savings?
There is no way to know in advance which point in time is the best for investing. That is because nobody knows exactly how markets will develop in the future. Ideally, you should invest on a regular basis. It is likely that the stock market will grow over the long term. In other words, it is always the right time to invest, as long as you want to.
Swissquote recently launched its own solution for saving with stocks. Who was Invest Easy made for?
Swissquote is the Swiss market leader when it comes to online banking in Switzerland. With Swissquote, you can buy all types of stocks, ETFs, and other securities yourself in a cost-efficient way. But there are also investors who prefer not to handle their investments themselves.
We launched Invest Easy for those kinds of investors. As its name says, Invest Easy provides a very simple investment solution for people who are new to investing. You can already begin investing with Invest Easy with as little as 500 francs.
How does Invest Easy actually work?
Invest Easy stands for simple, systematic, and affordable wealth building. All that the customer has to do is select a portfolio, and then pay in the money they want to invest. So Invest Easy is a simple stock-based saving solution for people who want to invest in a diversified way, but do not want to deal with financial markets themselves.
Why are there three different portfolios to choose from?
We deliberately offer just three different investment strategies in order to make things as simple as possible for customers. The Prudent Strategy contains mostly bonds, with only around one-third being invested in stocks.
With the Balanced Strategy, half of your money is invested in stocks, and 35 percent is invested in bonds. With the Ambitious Strategy, 75 percent is invested in stocks, and just 14 percent is invested in bonds. Real estate and commodities each make up 5 percent, and 1 percent is invested in cryptocurrencies.
How do the portfolios differ with regard to their potential returns?
The risk of short-term negative results is lowest when you use the Prudent Strategy, and highest when you use the Ambitious Strategy. On the flip side, the Ambitious Strategy has the highest yield potential. Based on the assumption that stock markets will grow in the future, the Ambitious Strategy is the most advantageous – but you have to be willing to accept the possibility of negative performance in some years.
How does Invest Easy perform?
Invest Easy only recently came on the market. But we can look at the figures so far. Over January, February, and March of this year, the performance, after deducting costs, was 4.67 percent for the Prudent Strategy, 7.32 percent for the Balanced Strategy, and 11.49 percent for the Ambitious Strategy.
What does Invest Easy offer in terms of cash savings?
One exceptional feature is that customers can save in four different currencies. Invest Easy has attractive interest rates for Swiss francs, as well as for US dollars, euros, and British pounds. The current annual interest rates are 2 percent (GBP), 1.75 percent (USD), 1.5 percent (EUR) and 1 percent (CHF).
That sets Invest Easy apart from many other digital asset management services that do not pay interest on cash balances.
Why use savings accounts at all, if saving with stocks is more lucrative?
It is true that saving with stocks brings much higher returns over long investment terms. But savings accounts are still a good alternative for people who only want to invest their money over a short term, or want to invest more conservatively. Invest Easy offers attractive solutions for both.
More on this topic:
Open an Invest Easy account now and try it out for free
