How to really save for retirement

Having just attended a conference in the pensions sector, I thought as a first post I’d look at some of the ideas about investing for retirement.

The usual advice is to invest in a portfolio of bonds and equities, with the equity component diminishing as a proportion of the whole as retirement age approaches. Indeed there are many persuasive reasons for taking this approach. The most to risk-averse would forgo any equity investment, and invest only in government bonds, with maturities close to date of retirement. But how risk averse is that strategy really?

Investment risk is generally measured against a benchmark safe government bonds. Only with government bonds – in one’s own jurisdiction – can one be certain of their value in in the future. Why? Because whatever else might happen in the markets, a Shop national government can always “print” more money cheap NFL jerseys to repay their debts. The catch is that creating more money causes inflation and devalues the currency, so although the government debt is repaid, the value of that repayment doesn’t stretch to buy as many goods as it may have done if the treasury had more cash and/or borrowing at its disposal.

The point of explaining that unlikely scenario is to say that Should while the money itself might be guaranteed, the value of that money is not. One topical concern in the UK is the demand and rising cost of providing care in old age. We can imagine a scenario where we save our hard-earned wages at, say, a return of 3% annually only to find that the cost of care is rising 4% annually. So we wonder if there is some kind of hedge against the rising cost of cheap MLB jerseys care. In fact as we start thinking about how we intend to spend our pension, we might start wondering what else can become unaffordable in time. Patriots Two such what-elses which come to my mind are food and fuel. For some, accommodation will likely Miami Dolphins Jerseys be in the mix too although others will have a main residence which is already paid for. So as well as cash to pay for those holidays we never got around to taking (we might want to hedge against inflation here too) we might also want to buy care home services, a farm and an oil well as we save for Shirts our retirement.

These are three illiquid investments, into which direct investment is hard, and buying shares in companies involved in these activities don’t really solve the problem. So I’d like to put the thoughts out there. What is the best hedge against the future cost of care, food and fuel?

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