Conor:
Winseer:
Defintions…Definitions…
Just as the “Defined Benefits” Pension worked out fantastic for workers now having reached the age of retirement, the “Defined Contributions” Pension - means for all that expensive money you pay in, 6% for most people, with a chance to pay in more - actually loses you out, looking at the average pension fund returns for the past 20 years, which has been consistently below the rate of inflation.
Please don’t ever get a job that involves maths or giving financial advice. You don’t have a scooby about either. The only way for a pension fund to have been below the rate of inflation for the last 15 months is if the fund managers put everything on black and it came out red. Literally impossible to lose money or not return double digit growth. My own SIPP which is invested in funds like pensions use, is up 25% from this time last year. Out of the last 5 years there’s only been one year where it fell below inflation - 6/7/2019-6/7/2020 when it was 0.44%, otherwise year on year it’s grown 16% 16-17, 6.81% 17-18, 9.6% 18-19, the 0.44% 19-20 and 25.91% 20-21.
Pension funds - lose the most of their money by investing it in lower-than-inflation rates of return “Products” like so-called Pristine Paper (2% return when inflation is over 4%) or “Cash” (0.1% return when inflation is over 4%) or Non-dividend-yielding shares, so called “Growth Stocks”, (0% return when inflation is over 4%)
That leaves the upside to those growth stocks as the ONLY open-ended upside to the average pension fund manager’s playbook…
The money in pristine paper and “cash” - is like trying to play football wearing full BFT kit in terms of how much it “holds the fund back”…
HEDGE funds - on the other hand, incorporate RISK in a manner that exposes the ENTIRE fund to that big upside…
BOTH types of fund - can blow the lot though, and remember it doesn’t hurt if you lose all your money bar a tiny bit over a very long period of time…
Like those who held onto their 1917 war bonds that guaranteed a 99% loss of capital once they got defaulted when the coupon was cut from 5% to 3.5% which just happened to push it underwater for the prevailing inflation rate for only the past entire century 1917-2017…
If I can borrow money from a bank and pay it back ten years from now with no extra on top - then I’m going to borrow as much as I bloody well can, as that bank is throwing money away on inflation in a similar manner that banks usually take it FROM the punters.
Anyone with a bank account deposit balance of five figures or better right now - is losing money hand-over-fist, as THEY have the choice of “putting it elsewhere” that borrowers just don’t have with their “re-financing” any more.
Sure, you might buy some shares, and they go ■■■■-up BUT people need to realize that they are SURE to lose their money on these “Churn and Burn” investments that really shouldn’t be touched with a bargepole.
I’ve been a bond trader in my time, and it is all about “Dumping losses into a counter-party’s pocket” the entire “Debt” industry, which seriously needs to be reformed and overhauled RATHER than this climate change rubbish.
…I even suspect that people due to retire in 10-20 years time - will be shocked to find their cupboard bare for a long time since… Too late to do anything about it THEN as the successive governments will have gone the way of the Wicked Witch of Grantham by that point…
