Should you trade shares in turbulent times? Absolutely!

Turbulence is part of everyday stock trading. At the beginning of March, the Swiss Market Index (SMI) fell significantly due to the war in Iran and the Middle East, in some cases shedding up to 3 percent in a single day. However, that's a typical reaction to a geopolitical shock. While the SMI recovered in the following days, it remains under pressure due to the ongoing tension.

Fluctuations such as these shouldn't deter anyone from investing in shares. On the contrary, we provide three good reasons why it's definitely worth buying into the stock market.

1. Higher returns in the long term

The stock market moves in cycles of upswings and downturns. Most price slumps are followed by phases of recovery.

It's important to invest your money on a long-term basis. If you remain invested for at least ten years, you give your capital enough time to survive interim setbacks and benefit from growth phases.

What's more, your potential returns are even higher because the gains you make are reinvested over the years and thus generate yet more revenue (the compound interest effect).

Over the last 50 years, the average annual return on the Swiss equity market has been about 7.8 percent (including dividends). Anyone investing CHF 50 per month would have built up assets of CHF 9,046 in ten years; an increase in value of CHF 3,046.

By comparison, the same amount placed in a savings account at an average interest rate of currently 0.12 percent would have grown to CHF 6,036 in the same period; an increase of only CHF 36.

2. Above the rate of inflation

Many Swiss people park their money in a bank or savings account. The widespread belief is that it's safe there. In fact, their assets are losing more and more purchasing power because inflation is reducing their value by more than any interest they may earn. Meanwhile, long-term investments in shares can preserve or even increase the purchasing power of your assets.

To minimise the risk of loss, your money should be spread across various asset classes, such as shares, bonds, real estate and precious metals.

Funds are a good place to start, as they reduce cluster risks and are broadly diversified. Cautious investors are best advised to choose a conservative fund with a low equity component, for example 25 percent.

3. When's the right moment? Right now!

Some people delay buying shares because they're waiting for the perfect time, i.e. when shares have reached their lowest point and are at their cheapest. However, that's difficult to foresee.

It's better to always invest the same amount over a longer period of time, for example via a fund savings plan. In this way, you buy more when prices are low and less when they're high, thus balancing out the purchase price – a process known as the average cost effect. This approach reduces both the risk of bad timing and the psychological hurdles. It also promotes a steady accumulation of assets over a longer period.

Tereza Kaurinovic is a client advisor at Migros Bank and an investment expert.