Well, low interest rates anyway.
Because retiring now costs 8 times as much...
RETIREMENT SAVINGS aren't what they were. Especially if you try to retire on them.
It finds that, adjusted for inflation,
you need four times as much saved for retirement as you would 40 years ago to
get the same level of investment income from low-risk assets today.
Blame this mess on the collapse in
interest rates, of course. Plus the drop in household savings. Plus the slide
in average personal income growth.
Upshot? US retirees "can no longer
afford to live on investment-grade fixed income returns," says the
S&P note. Which may hardly be news. But it should be making
headlines. Everywhere.
Check the UK situation, for instance...
Yes, if you want to retire on half of the average UK
salary, then generating that level of income from "low risk"
government bonds would need you to have 27 whole years of the current average
wage saved up today.
That, as you can see, has jumped from the last
half-century's low of just 3.5 years' full income, an achievable level which
retirees needed to have ready at several points in the 1970s and early 1980s.
Because back then, the rate of interest offered by "low risk"
government bonds touched above 16% per year. But it's since collapsed, down
to the current miserly yield below 1.7% right now.
Upshot? Besides a lot of poor pensioners – secretly hoping
they peg out before their money does – these record-low returns to
"safe" investments like government bonds and cash are also
sprouting a crime wave.
Because many savers are rightly looking for an alternative
to bonds or cash, but few people have knowledge or experience of what to ask
and what to avoid. So boiler-room crooks are pushing at an open door.
"Given the current financial climate with low
interest rates this type of fraud promising high returns is quite
common."
Blame the Bank of England, in short.
If you're investing in high-value objects or goods, using
specialist storage outside your home should be the smart option. Because
professional care is safer – reducing your insurance costs – and it will
ensure the quality of your property, maintaining its maximum resale value.
But how do you know the stuff really exists? How do you
know it is of the quality promised?
Get independent proof that's separate from your seller.
That starts with getting storage at a third-party specialist, a business
which is independent of your seller's company. You can then check the
custodian's list of what they're caring for, rather than taking your seller's
word for it. Also expect to get regular inspection reports from outside
experts, double-checking the custodian's list and the quality of the material
they're caring for.
This is how BullionVault works. Firstly we employ
independent custodians to care for our customers' bullion, entirely separate
from our own operation. Secondly, we post the vault operators' own bar lists
on the internet for our users to see. Against that, we post in public a full list of each
client's holdings – all under anonymous nicknames to protect privacy – so
you can check that the sum total matches with the independent bar lists down
to the last gram every working day.
Independent assayers then visit all the vaults each year,
counting and inspecting each bar and reporting
back to the independent chartered accountants who audit BullionVault's
books and prepare our tax return. That report is then posted on the auditors'
website, a site we couldn't hope to control.
Whether or not you fancy investing in maturing Scotch whisky – appreciating in the
barrel by 9% per year on average since 2005 – odds are you must look beyond
the low-yielding shares and near-zero yielding bonds which financial advisors
and pension funds would put you in.
Plenty of crooks are only too happy to help.
Do yourself a favour, and do your homework. But do also
accept that "risk-free" retirement savings in government bonds and
cash are a thing of the long-distant past.
