Most of us don’t actually have a choice about whether or not to invest our money.
Yep — investing isn’t just for experts or super-rich people. For most people it’s an essential step towards a secure retirement.
We’ve all heard how important it is to have “retirement savings,” but here’s the uncomfortable truth:
You can’t save your way to retirement.
If that’s news to you, it’s not your fault — the conventional advice has been misleading for decades.
The problem: inflation.
Inflation is the (usually) steady rise in prices over time.
Remember when sushi of the day was $5.40? Or a coffee was $2.50?
The Reserve Bank aims to keep inflation between 1–3% a year. But we’ve just lived through a period of over 7% inflation, and we all felt the sting of prices jumping far faster than our incomes.
So what does this mean for your retirement savings?
If you had $100,000 sitting in a savings account today, in 10 years it would only buy what $82,000 buys now — simply because life gets more expensive.
You haven’t spent a cent, but you’ve still lost nearly a fifth of your purchasing power.
And even if your savings account paid a generous 3% interest, you’re barely keeping pace with normal inflation — let alone the high inflation we’ve seen recently.
Here’s the part that really stings for doctors: interest on savings is taxed at your marginal rate. If you’re earning a decent income, that’s 33% or 39% gone before your money even has a chance to fight inflation.
The bottom line
Unless you’ve got squillions tucked away, you’ll need your money to grow faster than inflation.
One of the most accessible ways to do that is investing in the sharemarket. Historically, shares have returned well above inflation over the long term. And here’s a bonus most doctors don’t know: investments in certain structures (like PIE funds) are taxed at a maximum of 28% — regardless of your income. That’s a meaningful advantage over cash in a savings account.
Investing isn’t about gambling. It’s about giving your money a chance to work for you over time. The earlier you start, the more time compounding has to work in your favour, and the less pressure there is to “save everything” today.
This post is educational, not personal financial advice.