The first thing to point out is that this isn’t a competition. This isn’t a ‘we had it worse’ or ‘boomers’ v ‘snowflake’ fisticuffs. It is important to recognise some key points where the younger generations are finding difficulties and more importantly, see where we can help. That is our job; The global equity market before charges returned an annualised 8.09% per annum in the last 5 years, to the end of February 22. Our recommended equity portfolio returned before charges and annualised 11.52% per annum in the same period. A 3.43% per annum outperformance. If you were impressed with the difference the 1% outperformance could make….
Listen to Your Parents
I am worried about inflation. I always remember the stories my mum told me about 15-20% interest rates on their mortgage. Their ‘treat’ to themselves was to, once a month, scrabble enough to go share a beer and play a game of pool at the pub because they had nothing left.
I saw her recently and she lovingly listened to me rattle off about markets and about what this all could mean, though I am sure it was of little interest to her. However, she said something that really settled me and I want to relay this to you:
‘It may be hard, but it will be ok.’
They struggled, but everyone struggled. It felt bad while it was happening but that was the way it was. Where my parents are now in later life is all because of those years paying that mortgage. We have no idea whether these events will again be a reality or whether this really is just a short-term blip but hold fast and know it will be ok.
Gone are the days….
Affluent defined benefit pensions, the triple lock State Pension and 20 years of markets only going up. This generation is unlikely to see any of this, as defined benefit pensions proved far too expensive to keep but allow our grandparents to sit comfortably. I think it very unlikely that the State Pension will be anywhere near as beneficial as it is now (if we even have it at all) and all the market joys of the past 20 years look at risk.
So the government has made sure you are contributing to a workplace scheme. Great, because you are going to need it and this could be the difference between being able to enjoy any form of retirement or working until you are 75, just so you can afford food.
How Can We Act Now?
Now more than ever is the time to consider how these pensions are invested. A 1% increase in performance each year, for 35 years, leaves you an estimated 39% better off. Imagine a 35% increase on your salary right now….. how much better would that feel?
Workplace pensions are often invested in standard managed funds that tend to do around the same as the market with the odd star or underperformer amongst them. We suggest having a look and seeing what can be done.
The global equity market before charges returned an annualised 8.09% per annum in the last 5 years, to the end of February 22. Our recommended equity portfolio returned before charges and annualised 11.52% per annum in the same period. A 3.43% per annum outperformance. If you were impressed with the difference the 1% outperformance could make please contact us for a free consultation here.
We are fully authorised independent Financial Planners and so making you wealthier and swatting away the problems life could throw at you, is literally our job.
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The value of units can fall as well as rise, and you may not get back all of your original investment.
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