Return, security and availability – these three aspects are closely interconnected when it comes to investing, and they influence one another. Together they form the magic triangle.
There's a certain magic trick: someone folds a five-euro note up really small. And then unfolds it again. Suddenly it's turned into 50 euros. You can watch the trick and how it's done on YouTube. But even if you don't know how it's done, you know one thing: this isn't a way to actually multiply money. There has to be some logical explanation behind the „magic“.
Turning money into more money – that's what investing is all about. It begins with the question of what best fits your personal risk profile and your own investment goals. The magic triangle provides some important criteria to help answer that. Return, security and availability: these three aspects are closely interconnected. Here, too, the „magic“ lies in a perfectly plausible relationship.
What matters more to me?
The magic triangle is meant as a decision-making framework. What matters more to me: availability, security or the prospect of returns? The less time you give an investment, the greater your need for security. But the less risk you can tolerate, the less return you can expect in exchange. Anyone who wants big return prospects has to accept higher risks and needs a longer breath.
An example: your rainy-day fund should be available more or less every day. So a fixed-term deposit with a two-year term isn't the ideal form of investment for it. An instant-access account is far better suited in terms of availability, even if a fixed-term deposit usually offers the higher interest rate. In both cases the security is comparatively high. There are no price fluctuations, at any rate. But the return prospects are rather modest in return.
Equities, by contrast, are subject to price fluctuations, but offer greater return prospects. This is shown, for example, by a study from the London Business School and the Credit Suisse Research Institute. It examined the performance of various asset classes from 1900 to 2022. The result: over this period, the performance of equities outstripped that of bonds and money market instruments in all 35 markets examined. It exceeded that of money market instruments by an average of 4.6 percent per year and that of bonds by 3.3 percent per year.
When it comes to building wealth, the better return prospects can be decisive. Because the longer you stay invested, the greater the so-called compound interest effect. When returns are reinvested straight away, they in turn generate returns. Over time, the return acts like a lever. But for that, you do have to give the investment time. And you have to be able to stomach the occasional bigger price swing, too.
With patience towards greater return prospects
At the same time, the risks of an equity portfolio can be limited through diversification – the broader, the better. quirion's global ETF portfolio is especially broadly positioned. It comprises around 8,000 stocks from more than 70 countries. With a special combination of selected ETFs the investment strategists optimise the ratio of return prospects to risks in line with each investor's personal return-risk profile.
Even so, a pure equity portfolio with its price fluctuations isn't right for everyone. But bonds, especially government bonds of high credit quality, can act like a stabiliser in a portfolio. quirion's bond portfolio serves above all this purpose. It, too, is broadly diversified and is blended into the global equity portfolio depending on each investor's personal risk profile.
In this way, quirion opens up the return prospects of the capital markets for the most varied of risk appetites. The portfolios are available as a savings plan from an investment amount of as little as €25 a month. And if you do want to get at your money faster than originally planned: the wealth you've saved naturally stays flexibly available.
