Who wants to be a millionaire? You can either go on the TV game show or ask Pictet.
Pictet, the Geneva-based private bank knows a thing or two about millionaires. An updated historical study touting the virtues of buy-and-hold equity investment, as opposed to market timing and investing in bonds, lays out the path to becoming one.
For private banks it was a record year for profits, while investors in Swiss equities saw the nineteenth best performance since 1926, according to the long-term study which was updated and published Tuesday.
Record Performances
Someone investing 1,000 francs in Pictet's Swiss share index since 1925 and reinvested dividends would now be holding 1.57 million francs, a span of 96 years.
Swiss Federal Statistics Office data show that a Swiss born in 1925 had a life expectancy of about 60 years, give or take. By comparison, a female born in Switzerland in 2020 can expect to live 85.1 years, with male life expectancy of 81.0.
Secret to Wealth
So, the secret to wealth are Swiss stocks, a long life and a great deal of patience, with the latter rewarded by the magic of compound interest. The authors conclude that the investment maxims of the past remain valid in the future.
Unfortunately, the maxims «you can't take it with you» and «in the long run we are all dead» still apply as well.
Perhaps Pictet will take that into account and conduct a study on estate planning.
