We often hear phrases like “it’s better to keep my money saved” or “I prefer something safe like a term deposit.” While saving is a healthy first step toward good financial management, it is not enough to build long-term wealth.
Historically, savings instruments such as term deposits, savings accounts, or money market funds have delivered average returns between 2.0% and 4.0% per year. Once taxes and inflation (which averaged between 3.0% and 4.0% annually in Chile over the past decade) are factored in, the real growth of these instruments is virtually zero—or even negative.
In contrast, a diversified portfolio has consistently outperformed these instruments over the long term. Just a few examples:
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The S&P 500 Index posted an average annual return of 10.3% between 2013 and 2023.
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The MSCI World Index, which tracks developed global equities, averaged 8.7% annually over the same period.
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Even balanced portfolios (60% equities, 40% global fixed income) have delivered average annual returns between 7.5% and 8.0%, with lower volatility.
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Alternative funds, such as private equity or private debt, have produced average returns between 9.0% and 12% annually, depending on the vehicle.
Investing is not synonymous with risk — it is synonymous with strategy. The real mistake is leaving money “idle,” believing that doing so offers protection. In reality, those who invest with a long-term vision not only beat inflation but also build true financial freedom.
As a summary: saving protects your present, but investing defines your future.