Why invest in equities

Chart 1: Cash is safe, equities risky?

TO Warren Buffett, the world’s most successful stock investor, investing is about foregoing consumption now in order to have the ability to consume more at a later date. So it follows that when we invest, our aim is to buy an asset whose price will grow faster than inflation over time.

What makes the price of an asset grow? Well, when you buy it cheap, and it continues to be able to generate profits over time.