Weekly Buzz: What 200 years of market history have to say about investing

Deutsche Bank just released a 200-year study spanning 56 markets. It's one of the most comprehensive looks at how different assets perform over time, so here's one lesson from it that’s worth knowing.

Time is your greatest ally

The analysis delivers some serious punch right from its first chart. A single dollar invested in global stocks in 1824 and reinvested over time would be worth over $10,000 in inflation-adjusted terms two centuries later. Scale the math up and $1,000 then becomes $17.6 million today. That’s an average return of 4.9% a year, after inflation., through the relentless power of compounding.

“Safer” market options don’t come near. A dollar held as cash under the mattress, on average, lost 2% of its value a year as inflation ate away at its purchasing power. After 200 years, that dollar would be worth about one cent. In addition, the data shows how the longer you hold stocks, the more the risk of loss reduces: over any 25-year period, the probability of stocks losing money in nominal terms was just 0.8%.

We’re hardwired to see cash as safe and stocks as "risky", but that might be conflating short-term volatility with long-term risk. Stocks represent ownership in real businesses that sell real products and services. Even with inflation, companies can eventually raise prices, protecting their profits and, by extension, your investment. They’re a claim on real economic growth.

What’s the takeaway here?

Time is the best friend of the invested, and the enemy of the cash-holder. In the long run, the single greatest risk to your money isn't a market crash; it's not being invested. Cash is essential for an emergency fund and as a safety net, but if you have long-term financial goals – whether that’s retirement, a home purchase, or a child's education – it’s better to put your money to work.

(To get your cash working harder, check out USD Cash Plus – to get invested, see General Investing.)

In Other News: Gold and silver are up – thank the Fed

Gold and silver just leapt to multi-week highs as traders piled into bets that the Federal Reserve (the Fed) will cut US interest rates again next week. According to CME’s Fedwatch tool, markets are pricing in an 88% chance that the Fed trims rates in December, after a run of cooler US economic data.

Precious metals usually shine when investors expect lower interest rates and a weaker dollar. Lower rates reduce the opportunity cost of holding assets like silver and gold that don't pay income. A weaker dollar, which often accompanies rate cuts, makes gold cheaper for buyers outside the US. Silver has another edge: nearly 60% of its supply is used to make practical things like solar panels, electronics, and EVs. That ties the metal to global manufacturing and the green transition, giving it a steady source of demand.

There's also speculation about who might lead the Fed next. White House economic adviser Kevin Hassett, who favours lower rates, has said he'd be happy to serve as chair, and Treasury Secretary Scott Bessent reckons Trump is likely to name a new leader for the central bank before Christmas.

(If you’re looking for an easy way to invest in gold, silver, or both,  try Flexible Portfolios.)

These articles were written in collaboration with Finimize.

Simply Finance: Opportunity cost

Opportunity cost is what you give up when you choose one option over another. If you keep $10,000 in a savings account earning 1%, your opportunity cost is the 5% you could have earned in a higher-yielding investment. To use another example: gold doesn't pay dividends or interest, so when rates are high, holding it can mean missing out on income elsewhere. When rates drop, that trade-off shrinks.