When people talk about investing, it’s easy to get lost in the words. Let’s keep it simple: there are a few big families, like animals in a zoo. Each has its own character.
The savings account — the rabbit under a glass dome
Your money is safe and you can take it back whenever you like. But it earns almost nothing. With rising prices, it even loses a little strength every year. Risk: very low · Return: very low · Easy to get back: yes
Bonds — the tortoise
You lend money to a government or a company, which pays you back later with interest. Slow and steady. But careful: if the borrower can’t pay, you lose. Risk: low to medium · Return: modest · Easy to get back: fairly
Shares — the lion
You buy a small piece of a company: you become a co-owner. If it grows, your share is worth more, and it sometimes pays you part of its profits. The lion is powerful but unpredictable: some years it falls hard. Risk: high in the short term · Return: highest in the long term · Easy to get back: yes (on the stock exchange)
Property — the snail-house
A flat, a building. You collect rent, and the value can rise over time. But you can’t sell a house in one click, and you need a lot of money to get started. Risk: medium · Return: good in the long term · Easy to get back: no, it’s slow
Gold — the golden hedgehog
Gold pays no interest, rent or profit. But it has kept its value for thousands of years and holds up well when everything goes wrong or when money loses value. Risk: medium, it swings a lot · Return: low in the long term · Easy to get back: yes
What history says
A major study calculated the returns of these families in 16 rich countries from 1870 to 2015. The result: shares and property earned by far the most over time, around 7% a year on average after inflation, compared with a few percent for bonds and accounts.
The golden rule
No animal is perfect. That’s why you keep several: the lion to grow, the tortoise and the hedgehog to protect, the rabbit for everyday needs. And the longer the horizon, the more room the lion can have.
Try this tonight with your child
Ask them which animal they’d be as an investment, and why. Then switch: which animal are you? You’ll both learn a lot about how you feel about risk.
Further reading
Jordà, Ò., Knoll, K., Kuvshinov, D., Schularick, M. & Taylor, A. (2019). The Rate of Return on Everything, 1870–2015. Quarterly Journal of Economics, 134(3).
Dimson, E., Marsh, P. & Staunton, M. (2002). Triumph of the Optimists. Princeton University Press.
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Educational content, not investment advice. Past returns do not guarantee future returns.