Risk and Return
Why investments that can earn more can also fall further, how savings, bonds and shares compare on return and swings, and why extra risk doesn't guarantee extra return.
Key idea
Investments that can earn more can also fall further. From 1900 to 2025, Swiss shares grew 6.8% a year compounded, bonds 3.9% and savings 2.8%, but shares also had the worst year, −34.0% in 2008. Investors accept bigger possible losses only because they expect to be paid for them, and that extra return is a chance, never a promise.
What it is
Risk is how much an investment can swing, and how far it can fall. Return is what it earns. The two travel together: the investments that earned the most over time are also the ones with the worst years, and the safest ones earn the least.
126 years of savings, bonds and shares
Here's how Swiss savings accounts, bonds and shares (also called stocks) behaved from 1900 to 2025. Each bar runs from the worst calendar year to the best. The square marks what each grew a year, compounded: the steady yearly rate that turns the starting amount into the final one, which is what an investor who held on actually earned.
- Savings account: 0.0% to 5.1%
2.8% a year, compounded
- Swiss franc bonds: −12.1% to +28.4%
3.9% a year, compounded
- Swiss shares: −34.0% to +61.4%
6.8% a year, compounded
The average savings rate never fell below zero: its worst year paid almost nothing (0.0% in 2021) and its best 5.1% (1992), and savings grew 2.8% a year. Swiss franc bonds ranged from −12.1% (2022) to +28.4% (1922) and grew 3.9% a year. Swiss shares ranged from −34.0% (2008) to +61.4% (1985) and grew 6.8% a year.
Most years were much calmer than the extremes: in two years out of three, shares returned between −7.6% and +23.1%. But the extremes are what you have to live through. Take CHF 10,000 at the start of 2008. In shares it fell to CHF 6,595 (−34.0%) by the end of the year. In bonds it grew to CHF 10,453 (+4.5%), and in a savings account to CHF 10,090 (+0.9%).
Why risk gets paid
If a risky investment and a safe one promised the same return, nobody would choose the risky one. So investments that can fall a long way have to offer more on average to find buyers. That extra is called the risk premium. Shares make you a part-owner of a company and carry the most risk. Bonds make you a lender and sit in between. How big the swings get is what volatility measures.
Not every risk is paid, though. The risk that a single company fails can be spread away by owning many, which is what diversification does, so the market doesn't reward you for carrying it. Where you sit between safe and risky is the choice of asset allocation.
The honest caveat
More risk doesn't guarantee more return. It's the price of the chance of it. From 1962 to 1981, Swiss shares grew only 2.30% a year, compounded, while bonds grew 4.82% and savings 3.47%. Over those 20 years, CHF 10,000 became CHF 15,772 in shares, CHF 25,636 in bonds and CHF 19,772 in a savings account.
Of the 107 twenty-year stretches that start in each year from 1900, shares beat bonds in 82, about three in four, not every time. The stretches overlap, so they're fewer separate cases than they sound. How long you can wait out a bad stretch is what your time horizon decides.
Swiss note
These figures are in francs and before fees and taxes. The shares and bonds come from a study of Swiss returns since 1900 by the Geneva private bank Pictet (February 2026). The savings figures are our own calculation from the average savings rates published by the Swiss National Bank; a single account could do worse, for example if its bank failed. One country's history is only one possible path, and the next 126 years won't repeat it. Check your fund's factsheet to see how much it lost in its worst year.
Key takeaways
- —Risk and return travel together: the investments that earned the most also had the worst years.
- —From 1900 to 2025, Swiss shares grew 6.8% a year compounded, bonds 3.9% and savings 2.8%.
- —Shares lost 34.0% in their worst year, 2008; the average savings rate never went below zero.
- —More risk is no guarantee: from 1962 to 1981, Swiss shares grew more slowly than savings.
Related concepts
Volatility
Why the road to higher returns is bumpy, and when the bumps matter.
Time Horizon
When you'll need the money decides how much risk it can take.
Asset Class
Stocks, bonds, cash and real estate each work in their own way.
Stock
Own a slice of a company and share in the profits it pays out.
Bond
Lend money, collect interest, get your principal back.