True Wealth Clients: 100 Million Investment Gains
Seven years ago, we set out to make online wealth management possible for everyone. Since then, over ten thousand clients have entrusted us with their money and are invested with True Wealth. Since the beginning, one of our promises has been to invest as cost-effectively as possible so that nothing stands in the way of our clients' investment results.
So, it's time for us to be transparent with ourselves.
Over 100 million francs in returns for our clients
Over the last few years, capital market returns have been mostly positive, albeit with constant ups and downs. As a company, we have also been able in 2021 to enjoy steady growth in our client base and the money entrusted to us. But how much of these positive market returns have really stuck with our clients?
As of the end of December 2021, our clients have paid in a total of CHF 786 million and had CHF 155 million paid out since the launch of our platform. The net deposits by the end of December 2021 were therefore CHF 631 million. The value of the investment portfolios amounted to 741 million Swiss francs, so the asset growth for our clients amounts to a good 110 million Swiss francs, after deduction of all costs. Calculated per ten thousand clients, that's over ten thousand francs.
In comparison: over the entire multi-year period, we collected around 4.3 million francs in asset management fees (behind True Wealth is a team of 20 dedicated employees).
The fact that the stock markets have performed so well in recent years should not be taken as a guarantee that we as investors are protected from market upheavals. As always, the future remains uncertain.
The other side of the coin
But it is not only our clients who are winners here. Those who invest in the capital markets forego personal consumption in the here and now and make their capital available to others as a production factor and risk buffer. In terms of the economy as a whole, this means that less is consumed and instead work is done on solutions for future needs, such as innovations in the health sector or ensuring food security for a still growing human race.
Something is often forgotten, because it is part of the nature of modern media to give disproportionately more weight to negative news than to positive changes, which are often slow and unspectacular: It is rarely pointed out that the number of people living below the absolute poverty line globally is not only decreasing in relative terms, but also in absolute terms. The (for us unimaginable) threshold of absolute poverty is defined by the United Nations as an inflation- and purchasing power-adjusted income of less than 1.90 US dollars per day.
If 200 years ago around 1.1 billion people lived on this earth, this meant an existence in absolute poverty for the vast majority. In the following 150 years, however, humanity's prosperity increased faster than global population growth, so that an ever smaller proportion of humanity has to get by with an income below the absolute poverty line: At the end of the 1970s, 4.4 billion people lived on our planet, 1.9 billion of them below the absolute poverty line, 2.5 billion lived above it.
What has happened since then is more than remarkable:
Since the late 1980s, global economic growth has lifted over a billion people out of absolute poverty. Although more people continue to be born than die, the number of people living below absolute poverty has declined rapidly, not only proportionally but also in absolute numbers. In 2015, 734 million people still lived below the absolute poverty line, 1.2 billion less than in 1990.
More recently, this development was interrupted by the Corona pandemic; estimates by the World Bank suggest that the pandemic and the imposed restrictions have thrown some 100 million people back into absolute poverty.
This long-term development is independent of where one defines the poverty line. This should not be a reason to become complacent; poverty remains one of the biggest problems of our generation. But it can help us to recognise what works.
- Max Roser and Esteban Ortiz-Ospina (2013) - Global Extreme Poverty
- World Bank (2021) - Updated estimates of the impact of COVID-19 on global poverty: Turning the corner on the pandemic in 2021?