The difference between saving or investing 100 euros a month for 40 years

We have just held a conference on elEconomista.es under the title “The Possibility of Active Management” and as a conclusion we made a headline on the website and on the newspaper spread that in Spain we are not able to generate wealth. from our own savings. The characteristic figures of what we do with our money go beyond the concept of worry when we analyze that investment funds and shares hold less than half of the money in demand accounts and deposits. And, worst of all, bricks take away four out of every five euros of our wealth.

The distance between the real population and the investment industry is so great that Only 3% of Spaniards say they save with complex financial productswhich include mutual funds, stocks and fixed income securities, while almost 39% prefer to use current accounts and even 23% directly use the mattress as a synonym for cash, according to the study “Financial Education and Savings and Investment Solutions” prepared by Anna Izpierto, Irma Martinez and Gloria Ruiz from CNMV.

Although I have many doubts about such a low percentage, if you think that in terms of the number of participants and shareholders, including duplications, one after the other would be the largest community in Spain – more than the Catalans and Andalusians – the reality is that in the Spanish savings ecosystem there are few investors, perhaps two million.

I wonder why we can’t turn smart savers into investors and eliminate the poverty that keeps this migration from happening.

I think many people do not understand me when I explain that the Tressis Cartera Eco30 fund that we recommend should lead us to doubling every euro of our savings every decade. target of achieving 7% year-on-year with the power of compound interest – over six years we have an average annual return of 8%.

For this reason, I like to calculate the difference between saving 100 euros a month and investing it for forty years. Under the simple assumption that we put that amount into a piggy bank every month – the worst possible decision, since inflation will eat up most of it – we would save 48,000 euros. If we had put that amount into term deposits or accounts that earned us a 2% return, we would have ended up with an asset of 72,500 euros, a 50% increase in yield. But the true transformation of a saver into an investor Achieving a long-term annual return of 7% would require saving from €100 to €269,000 per month.…Tripling the gains from deposits and five times the income from money under the mattress. A nice bonus to your pension.