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  • Jan De Ost

Pension funds are cutting their payouts...

The Financial Times published this article: Pension funds are very likely going to cut their payouts.


Yet many decades ago, the people were promised a safe and guaranteed pension on the condition that they invest in 'safe' pension funds. We now see the result. Millions of citizens will see their retirement income fall.


The funds they invested in were deemed safe as they invested in 'low risk assets' such as government bonds. But who can claim that bonds are the best asset class given this proof:



This illustration -of the last 100 years- should speak for itself. During that timeframe the government bonds were even yielding almost 6%, and those days are long gone!


At Vladeracken Asset Management, we are advising our clients to invest in stocks. Stocks are no lottery tickets, they are a part-ownership of some of the largest companies and brands in the world. They have worked out extraordinary well in the last century (including several world wars, natural disasters, recessions, financial crises...) and we believe they will do so over many decades hence. Why? Simply put: the population grows every year and the world's population becomes a bit richer every year:




In the short term, stocks are very volatile, meaning they can move up and down in a severe way. Over the long term however, the result is clear. The great Benjamin Graham once said: "In the short term the market is a voting machine, in the long term it is a weighing machine." He couldn't have been more right. This short article demonstrates again.


Do make sure that for your retirement, you do not repeat this historic mistake. Invest in a diversified portfolio of stocks, invest for the long term and the result will very likely approximate that of the last 100 years.


#stocks #outperform #longterm #pension #funds

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