If you want to prevent inflation-driven inflation or the risks of demographic change in your pension, you have to increase the risk in your investments in order to earn the necessary return. Two rules in particular should be observed, which have already been propagated several times in this blog and explained with numerous statistics. That would be on the one hand a broad spread by a high diversification, on the other hand an as long as possible investment horizon of at least ten years. Who would have heeded just the last advice, it would have brought, depending on the asset class during this period to a handsome fortune.
MSCI World ETF, Gold and Bitcoin in Comparison
While there was a zero-interest lull on overnight money in the last decade and investors could only collect a small amount for their deposits, they could have made significantly higher returns if they had invested their money in an ETF, in gold or even in bitcoin.
If you had exchanged 10,000 euros for gold in June 2013, you would have received 13,756.74 euros for it when you sold it ten years later. You would have done even better if you had invested the same amount in a broadly diversified equity ETF such as the MSCI World. Then, with 28,026.67 euros, you would have almost tripled your investment.
However, one would have made the most significant increase in value if one had invested in Bitcoin in 2013. Then one would have had the cryptocurrency ten years later in the equivalent of proud 717,090.89 euros in his wallet. However, the Bitcoin was extremely volatile, especially in its early days, which meant that one had to endure sometimes violent price fluctuations in both directions. Sometimes it went up more than 440% within just one month, sometimes the price corrected by almost half, which sometimes meant several thousand euros minus.
Over the past decade, we have had to endure quite a lot emotionally. It is questionable whether one would have held on to one’s position for so long.
| Asset class | Invested capital | Final amount |
|---|---|---|
| MSCI-World-ETF | 10.000,00 Euro | 28.026,67 Euro |
| Gold | 10.000,00 Euro | 13.756,74 Euro |
| Bitcoin | 10.000,00 Euro | 717.090,89 Euro |
Regular saving further increases the return
These figures could even have been increased considerably by paying an additional 100 euros into the respective asset class every month via a savings plan, completely unemotionally and automatically, in order to balance out the fluctuations in the price over the long term and to acquire the average. In weak market phases one would have then advertised for its 100 euro more shares, in better ones however new highs made.
Over ten years, one would have invested 24,000 euros together with his initial investment. In the case of gold, the end result would have been around 30,200 euros, in the case of an MSCI World ETF almost 50,200 euros, and in the case of Bitcoin a whopping 859,000 euros. With all three assets, one could have achieved a tidy increase in value.
| Asset class | Invested capital | Final amount |
|---|---|---|
| MSCI-World-ETF | 24.000,00 Euro | 50.176,08 Euro |
| Gold | 24.000,00 Euro | 30.240,14 Euro |
| Bitcoin | 24.000,00 Euro | 858.593,42 Euro |
Ten years is a long period, during which nevertheless a lot happens. The zero interest rate policy of the central banks was able to boost the stock markets, but they were still struggling with the foothills of the financial crisis or gave way significantly just to the Corona pandemic. At that time, only real nerds would have heard of Bitcoin.
Keyfacts
- a broadly diversified ETF was a good choice in the last years
- Gold was less volatile
- Bitcoin even more so
- with regular savings rates the return can be increased significantly
