Young Man Needs Help! Pension or another way?

atush

So, you have 7% overall going into your pension each year. Not outstanding, but better than nothing.

1500 quid, how many months would that keep you going if you lost your job? Do you have any short to medium term plans that need funding (such as a car, house deposit, holiday etc? It sounds to me that 10-20 per week should go into an ISA? pr a regular saver perhaps.

Teifi_Swimmer

Hi there. I am probably going to put a few noses out of joint here, but I believe that any money put into a pension is likely to be lost due to inflation.

Quantitative Easing is a fancy term for money printing. Governments do it on purpose, ostensibly to 'fix' the economy. The real reason they do it is because they are insolvent. They are massively in debt, and that debt is only getting worse. One way or another, we are heading for a currency collapse. If you think this won't happen, think again. Every thirty or forty years, the world has a new monetary system.

Take a look at some of the graphs of the US national debt. And the UK nation debt. The actual debt graphs.

Forget about Debt to GDP ratios - the government lies about GDP in the same way that it lies about inflation. Instead, look at the slope of the debt growth. That's what mathematicians call a 'hockeystick' curve. Exponential growth. It's on the cusp of going vertical.

If the base rate wasn't artificially held near zero, our government's debts would quickly spiral out of control. When our politicians talk about reducing the deficit, they are talking about reducing the amount by which the debt is growing, not the debt itself. It's a big deception. Ultimately, the government can't pay off its debt. It is impossible. And when you throw in the unfunded liabilities such as welfare, pensions, education, benefits and the NHS, it becomes apparent that the government has two choices. 1. Default outright. 2. Default by repaying everyone in devalued pounds. Most governments in this situation opt for no. 2.

In order to devalue our currency, the government is targeting a real inflation rate of approximately 7 to 10%, whilst telling us that inflation is only about 2 or 3%.

Most pension funds are designed to grow at an annualized rate of around 6%. They can typically withstand the shock of about one stock market crash per decade. We have had four stock market crashes in the last ten years, and we may be on the brink of a fifth. So much for stocks and shares.

As for the other main component of pension funds - bonds - well stop and think about it. What are bonds? They are debt. Government bonds (known as 'gilts' in the UK) are the debt of a government. In our case, the debt of a deeply insolvent government. Now if a government is printing money like crazy (as ours is) it eventually leads to massive inflation. If printing money got economies out of trouble, then Zimbabwe would be a very prosperous country indeed.

It is my considered opinion that we are heading for a slow, painful currency collapse via a period of prolonged, extremely high inflation. Not just in our country, but in all countries that try to maintain a peg to the dollar. Such a collapse would render government debt (gilts) practically worthless. The stock market will suffer, and so will any pensions that hold equities in general.

It is my opinion that the main worthwhile investments will be commodities. By this I mean tangible assets. Precious metals (particularly gold and silver), gemstones, fine art, antiques, oil, energy, food, agriculture and industries related to food production.

I highly recommend that you watch Chris Martenson's presentation at the Geneva precious metals conference (YouTube) and also his 'Crash Course'. Chris Martenson is a trained scientist who can understand the implications of a 'hockeystick curve' when he sees one.

I also recommend watching the documentary style movies "Four Horsemen Film" by Renegade Economist and "The End of The Road - how money became worthless" by 100th Monkey Films.

Mike Maloney's Debt Collapse presentation on YouTube is also worth watching.

The book, "Currency Wars" by James Rickards is also worth reading.

Oh, and by the way, there is nothing on Martin's MSE website about buying gold. Only a section on how to sell gold. I highly recommend that you read up on physical gold and silver as an investment. They are probably the best pension anyone could have. Completely out of the system and free of counterparty risk. If you buy British coins - the gold Sovereign and the silver Britannia, they are UK legal tender and therefore Capital Gains Tax free when you sell.

Kind regards,

TS

PS: If you think I'm joking about inflation, ask yourself why Pepsi is now coming in smaller 250ml stubby cans. Ask why Coca Cola now comes in 330ml bottles. And why the 2 litre Coke bottle is now competing on the shelf with the 1.25 litre bottle, the 1.5 litre bottle and the 1.75 litre bottle. Ask yourself if the makers of Tango, Lilt and Robinson's fruit squash really need to put artificial sweeteners in both diet and non-diet versions of these drinks. Do they care about how fat we're getting, or are just trying to cut corners because sugar is getting so expensive and aspartame is cheap?

This is called stealth inflation, and it is what companies do to make you think the price isn't going up so fast.

If you think that any pension can keep up with real inflation, think again.

dunstonh

I am probably going to put a few noses out of joint here, but I believe that any money put into a pension is likely to be lost due to inflation.

Pension is just a container for investments.

Quantitative Easing is a fancy term for money printing. Governments do it on purpose, ostensibly to 'fix' the economy. The real reason they do it is because they are insolvent. They are massively in debt, and that debt is only getting worse. One way or another, we are heading for a currency collapse. If you think this won't happen, think again. Every thirty or forty years, the world has a new monetary system.

Irrelevant as the assets you would hold in the pension are the very same ones you can hold outside of the pension. So, all would be affected by external issues.

Most pension funds are designed to grow at an annualized rate of around 6%.

No they are not. Funds will grow at what they grow.

We have had four stock market crashes in the last ten years, and we may be on the brink of a fifth. So much for stocks and shares.

And typical balanced managed funds have still managed in excess of 5% a year during that period. And these are nothing special. They are your bog standard lazy investor funds.

Oh, and by the way, there is nothing on Martin's MSE website about buying gold. Only a section on how to sell gold. I highly recommend that you read up on physical gold and silver as an investment. They are probably the best pension anyone could have.

Yet in periods of growth or minor recession, gold has been left behind the rest. Only in significant turmoil gold picks up "real" growth. Are you really predicting 40-50 years of such activity?

If you think inflation is going to the issue then global equities should be investment of choice.

If you think that any pension can keep up with real inflation, think again.

If you think a tax wrapper can keep up with information then think again. It cannot. It is just a container and doesnt make or lose money.

Teifi_Swimmer

I am predicting a global currency collapse and at least a decade of inflationary depression.

I see governments moving to snatch pension funds as they get more and more desperate. They don't have to force compulsory bond purchases. The pension fund managers come cap-in-hand to the government.

Look at the fiasco of the Royal Mail pension. Asset stripped to the tune of £28 billion by the government. Yes, they promised to make up the existing £10 billion pension hole with gilts (read: soon to be worthless government debt) and that was the price the poor posties paid. Few stopped to think that it was the government's NIRP/quantitative easing that caused the hole in the Royal Mail pension in the first place.

The chances of a typical pension fund keeping up with inflation are slim to none. Even a defined benefits scheme is capped at something like 5% inflation. And we sailed past that yonks ago.

How the hell does one measure the performance of a pension anyway? Pensions are measured against an industry standard benchmark that is also at the mercy of the stock market. They could both be falling off a cliff for all you know. The pension is still meeting the arbitrary benchmark. It's all a big con. And so long as the fund managers and financial advisors get their commission trail, they don't really care.

When everything starts to collapse, 'wealth' will evaporate faster than a cup of water on a hot griddle. A tax-free pension 'wrapper' will only serve to prevent the man in the street from rescuing his hard-earned savings before they go down the toilet.

The reality is that since Richard Nixon took the world off the gold standard in 1971, governments have been free to deficit spend. And spend they did. Our entire global economy is based on debt. Deeper and deeper levels of borrowing. And the debt is unpayable. Any attempt to pay down the debt would collapse the entire currency system. Therefore, in order just to survive, the global economy has to grow perpetually. Can an economy really just grow and grow and grow?

Try something for me.

Exhale and relax. Now take a deep breath and keep breathing in for ten minutes.

What do you mean you can't?

I strongly recommend that the young man asking about pensions go onto YouTube for a few minutes and search out this video:

"$16 Trillion U.S. DEBT - a Visual Perspective."

Then he should ask himself these questions: Does that debt really look payable? Or is the US government going to devalue the currency? Are all governments in the same boat? Wouldn't they follow suit? After all, when a can of Coke costs £10, a trillion pounds looks more like £100 billion.

If that young man comes to the same conclusion as me, he won't touch a pension with a bargepole. He'll start looking at gold and silver as an alternative.

Teifi_Swimmer

dunstonh wrote: »

Yet in periods of growth or minor recession, gold has been left behind the rest. Only in significant turmoil gold picks up "real" growth. Are you really predicting 40-50 years of such activity?

If you think inflation is going to the issue then global equities should be investment of choice.


.

I just wanted to put the idea of gold out there for the young man to do his own research. I am shocked that there is no section in Martin's MSE about this. Selling gold and silver is just about the last thing I would advise anybody to do. It's just plain dumb.

There will be a time to sell gold (or use it as collateral if we ever return to a partial gold standard). At that point, equities will be a very good buy, I'm sure. Many experts predict that the gold/DOW ratio will close down to 1:1 or even better in favour of gold. We'll see.

I don't trust the stock market. I believe the governments are buying the indices to give the appearance of performance. No matter what the individual companies that comprise the indices are doing (and they're all pretty pants right now), the indices just seem to keep going up.

Except today.

Gold is a screaming buy. And so is silver. When you research the fundamentals and understand what is driving the bull market, equities start to look very shaky indeed. Yeah, the numbers are going up, but so is the price of Coke.

[Deleted User]

If global currency collapses and you need to cut a few shavings from your gold stash to buy a loaf of bread you've got bigger problems than "I wonder how my retirement is doing" and they're problems that holding gold isn't going to solve.

If you're advising someone to buy gold you should make it clear whether or not you have a vested interest in gold, 'cause if you do it's very important someone knows that by encouraging others to buy in you're increasing the value of your investment.

Learning about how global finance works is certainly a worthy investment of a persons time that everyone should do but encouraging panic and short-term thinking isn't responsible.

Teifi_Swimmer

I think everyone should practice due diligence.

I own a small amount of gold and silver.

I have a small pension I stopped paying into years ago. Had I known the way the world works, I would never have started paying into it. As it is, I use it to hold precious metals ETFs and mining shares. I'm not comfortable with not being able to completely control my holdings (Google 'rehypothecation') but it's the best I can do.

I really, truly believe that inflation is massively understated and that the country is in far worse shape than our government says it is. We've just had our first 'bail-in' (the Co-Op bank) and nobody here in the UK so much as blinked, which gives you an indication of public awareness.

It has been estimated that as few as 1 in 100 people really understand how our banking system works. The terms, 'Fractional Reserve Banking' and 'Deficit Spending' mean nothing to them. They think that banks lend out money that other people deposit. They don't realise that banks create money out of thin air, and then lend it to us at interest.

'Quantitative Easing' is a reassuring word that makes the average Brit think, "Oh, good, the government is finally doing something about the 'economy'." They don't understand the implications of monetizing debt.

Sadly, hardly anybody in the Western world knows what is happening to them. Inflation is a stealth tax. It gradually makes us poorer. We don't do anything about it except grumble at the prices in the shops. We don't understand that there doesn't have to be any inflation. The government does it slowly and deliberately. It is like boiling a frog.

Martin's MSE tips work in the short term because currencies are stable in the short term. But nothing on this web site really prepares the public for what is to come.

And it is coming.

Teifi_Swimmer

I think all the financial advisors on here have a vested interest in getting people to take out pensions and other financial vehicles. This is how they earn their commission trail.

I don't encourage people to investigate gold and silver as an investment because I 'want my own investments to go up.' I do it because I see disaster on the horizon and I'm trying to warn people.

I hope that the currency collapse isn't sudden and catastrophic. I hope that the central banks act responsibly and work something out. However, I believe that their policy of creating speculative bubbles everywhere - the wealth effect - is completely irresponsible. It can only end in tears.

Teifi_Swimmer

By the way, I am not encouraging panic. I am advising people in a calm manner. I have to speak up because nobody seems to be thinking any more. They're all busy watching the pennies and switching from cash ISAs that pay 2.3% to 2.6% and all the time real inflation is closer to 10%! Hey everybody, wake up, that's a loss!

I am a physics graduate. That's mostly maths and very boring, unless you happen to be Jacob Barnett. But you do learn some useful skills. I took a look at the government debt curves and my first thought was, "Holy s***! That does not look good."

I don't think we've got long before government debt is way out of hand. I'd say 3 to 7 years. Certainly by the end of the decade.

Any talk of financially planning for 10, 20, or even 50 years into the 'future' using financial instruments that rely so heavily on government debt is meaningless, in my humble opinion.

And any money paid into an average pension is lost, unless that pension is very carefully managed and inflation-proofed.

Do you know what happened to the £28 billion worth of assets in the Royal Mail pension after the government took over? They were auctioned off. The cash was seen as a 'windfall' and used by the government to reduce the 2012 deficit. Yep, the money is already spent. It's gone. Vanished. To be replaced by government promises to repay (with devalued pounds) in the future.

What's happening in your pension?

dunstonh

I think all the financial advisors on here have a vested interest in getting people to take out pensions and other financial vehicles. This is how they earn their commission trail.

What commission?

I don't encourage people to investigate gold and silver as an investment because I 'want my own investments to go up.' I do it because I see disaster on the horizon and I'm trying to warn people.

Yet that is what a lot of gold/silver investors do. They sign up to forums to post stories of doom and gloom to try and get more people to buy gold and silver which ramps the price up until such time the bubble bursts and the prices drop.

Do you know what happened to the £28 billion worth of assets in the Royal Mail pension after the government took over? They were auctioned off. The cash was seen as a 'windfall' and used by the government to reduce the 2012 deficit. Yep, the money is already spent. It's gone. Vanished. To be replaced by government promises to repay (with devalued pounds) in the future.

You keep mentioning Royal Mail but its irrelevant.

What's happening in your pension?

What if I said it was invested in gold? That would stump you as you are promoting gold but not pension. (for clarity, it is not invested in gold. I am not that foolish to invest in one asset class that has a history of doing well in depression/recession but poorly in periods of growth)