Wealth Management
Why financial knowledge matters
Why financial knowledge matters
Many people shy away from investing in the financial markets because they lack the necessary knowledge. Banks are therefore making a concerted effort to improve the financial literacy of the population.
Many Swiss people want more financial freedom – they dream of travelling the world, owning their own home or taking early retirement. This has been backed up by various studies. Despite that more than half of the population keeps their money in a savings account instead of investing it.
Yet, experience speaks in favour of the financial markets:
Anyone who deposited 1,000 Swiss francs in a Swiss savings account 30 years ago now has just under 1,310 francs thanks to an average interest rate of 0.9 per cent. The average return of 8 per cent on Swiss equity investments, on the other hand, has enabled wealth to grow to around 10,000 francs.
Lack of knowledge slows down wealth accumulation
The figures show that investing money in the financial markets can build wealth in the long term. Nevertheless, around a third of savers do not invest because they believe they lack the necessary knowledge. In addition, many think that their assets are too small to invest.
A lack of knowledge and a perceived lack of wealth prevent many people in Switzerland from investing their money in the financial markets. ‘Yet the investment market is more accessible than ever before,’ says financial blogger Thomas Kovacs. Digital investment and pension solutions make it easy to get started – regardless of the size of your portfolio.
Financial literacy is more important than ever
The increase in investment opportunities is very timely. Matthias Geissbühler, Chief Investment Officer at Raiffeisen, emphasises: ‘Nobody builds up wealth with a traditional savings account these days.’
That’s because low interest rates and inflation mean that money in savings accounts is losing real value.
Financial literacy is therefore becoming increasingly important. Not least because the simplicity and accessibility of today's offerings can tempt people to speculate rather than build wealth in the long term.
Risks and opportunities in the digital world of knowledge
Social media are a source of much unreliable information. ‘Young investors are thus being pushed into speculative asset classes,’ warns Geissbühler.
For him, banks must provide low-threshold digital offerings, because ‘many young people are reluctant to talk to a customer advisor.’
At the same time, Geissbühler has no doubt that anyone making financial decisions should seek professional advice. ‘After all, when I'm sick, I go to the doctor.’
How banks contribute to financial literacy
Financial blogger Thomas Kovacs believes that the first steps in investing can certainly be taken alone: ‘I don't need to go to the doctor to know what a healthy diet is.’
According to Kovacs, trying things out for yourself with small amounts is part of financial education – as is reading information materials. However, as assets grow, advice from banking experts becomes increasingly important.
His experience shows: ‘Many young people start with crypto apps and later find their way to traditional providers such as banks.’ These also score points with the financial blogger – thanks to their high level of trustworthiness.
Asset planning is more than just growing your money
For Matthias Geissbühler, however, a banking relationship goes far beyond investment advice. ‘Investing is only one element of wealth planning.’
Over the course of a lifetime, questions arise about pensions, taxes and home ownership. According to Geissbühler, only banks offer this kind of comprehensive advice.
And people make use of it. A study by the Lucerne University of Applied Sciences and Arts shows that around half of the Swiss population who invest make their investment decisions together with a bank advisor or trusted partner.
What’s more, the wealth management advice provided by banks also has an impact on the economy as a whole: financially stable Swiss citizens support national prosperity by ensuring purchasing power, investment and economic stability.
