While 10,000 EUR may not be a life-changing sum of money, the decision to leave it in a savings account or invest it in the stock market will make a dramatic difference to your wealth over time.
Given how low interest rates are, a savings account can barely keep up with inflation. Meanwhile, the FTSE 100 – the index of the largest 100 companies listed on the London Stock Exchange by market cap - currently yields about 3.6%.
Let’s assume you invest 10,000 EUR in the stock market and it grows by 4.5% a year after charges for 20 years. If you reinvest all your gains, your sum could turn into 24,555 EUR at the end of the period. Of course, there's the risk that the value of your investments can fluctuate, and you may not get back what you invested. However, research such as the Barclays Equity Gilt study shows that stocks tend to beat cash over the long term.
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