The Investor is unwell, I mean on holiday. Definitely not too drunk to write his column this week. Nuh-uh. No way, Jose. Nope.\u00a0<\/em><\/p>\n Hi! The Accumulator<\/em> here. Just covering while my good friend The Investor<\/em> is having a nice rest.<\/p>\n OK, links is it? I\u2019ve got loads. Because we\u2019ve been planning this for weeks. Sure have.<\/p>\n Anyway, one article that sobered me up this week is a penetrating critique<\/a> of defined contribution (DC) pensions written by the esteemed William Bernstein and Edward McQuarrie.<\/p>\n They elegantly show that most people relying on DC pensions to provide for a successful retirement need:<\/p>\n The savings rates required to retire on a portfolio of low-risk assets (e.g. index-linked government bonds) are just not doable for most people. From the article:<\/p>\n Grim indeed: using historical data, our analysis shows that not until the savings rate approaches 25% does the saver have more than a 50\/50 chance of success, and to approach certainty requires savings rates in the 40% range. Lower savings rates require a market return that has seldom been on offer.<\/p>\n<\/blockquote>\n To bring savings rates down to something half manageable, it\u2019s 100% equities all the way:<\/p>\n It turns out, counterintuitively, that only one maneuver improves the success rate, and that\u2019s a 100% stock portfolio both during accumulation and retirement.<\/p>\n<\/blockquote>\n Even then you need a 20% savings rate to push down your chance of retirement ruin to 4%.<\/p>\n How likely is it that the majority can achieve that? We\u2019ve known for a long time that the median UK pension pot is ridiculously underfunded. And those who struggle to save likely face bleak retirements, or a working life that stretches far into old age.<\/p>\n Bernstein and McQuarrie\u2019s prescription:<\/p>\n The current system doesn\u2019t need more nudges; it needs dynamite and rebuilding from the ground up on the DB [defined benefit] model.<\/p>\n<\/blockquote>\n That isn\u2019t going to happen here. Nor in the States. Indeed, the authors\u2019 aim seems to be to push back against libertarian forces who seek to dismantle all forms of social insurance, and leave individuals at the mercy of the market.<\/p>\n Whatever you think of the politics, the underlying research paper<\/a> by Bernstein and McQuarrie is a clear-eyed education in investing risk. Most of all, it relentlessly strips away the many myths that comfort us when we look at a global equities returns chart and notice that it\u2019s done pretty well for fifty years.<\/p>\n Have a great weekend.<\/p>\n FIRE-side chat: after the rollercoaster \u2013 Monevator<\/a><\/p>\n SIPPs vs ISAs: battle of the tax shelters \u2013 Monevator<\/a><\/p>\n From the archive-ator: Bear market recovery times \u2013 Monevator<\/a><\/p>\n Crypto ETN ban could be lifted for UK retail investors \u2013 Which<\/a><\/p>\n Revenge tax menaces foreign holders of US assets \u2013 FT<\/a><\/p>\n Pension reforms ahoy. Just what we need! \u2013 This Is Money<\/a><\/p>\n UK Tesla car sales down by a third: analysts stumped \u2013 Guardian<\/a><\/p>\n Another fintech snubs the London Stock Exchange \u2013 FT<\/a><\/p>\n Source: This Is Money<\/p>\n Tesla price plunge: a textbook case of idiosyncratic stock-risk \u2013 This Is Money<\/a><\/p>\n Banking switch offers are hot right now \u2013 Be Clever With Your Cash<\/a><\/p>\n Best mortgage rates for first-time buyers \u2013 This Is Money<\/a><\/p>\n Hack: How to \u2018spend\u2019 on your debit card without spending \u2013 Be Clever With Your Cash<\/a><\/p>\n Avoid these travel insurance nightmares \u2013 Which<\/a><\/p>\n UK property hotspots \u2013 This Is Money<\/a><\/p>\n WASPI women: watch out for scam websites \u2013 Guardian<\/a><\/p>\n Get up to \u00a31,500 cashback when you transfer your cash and\/or investments to Charles Stanley Direct through this link<\/a>. Terms apply \u2013\u00a0Charles Stanley<\/a><\/p>\n Care-home fee black spots \u2013 This Is Money<\/a><\/p>\n Get up to \u00a3100 as a welcome bonus when you open a new account with InvestEngine via our link<\/a>. (Minimum deposit of \u00a3100, T&Cs apply. Capital at risk) \u2013 InvestEngine<\/a><\/p>\n Nintendo Switch 2 review \u2013 IGN<\/a><\/p>\n Homes for sale in cultural hotspots, in pictures \u2013 Guardian<\/a><\/p>\n US safe-haven status in peril \u2013 Paul Krugman\u00a0<\/a><\/p>\n FIRE sceptic rethinks their biases \u2013 Morningstar<\/a><\/p>\n How to avoid the big investing mistakes \u2013 Behavioural Investment<\/a><\/p>\n How to rationalise dreadful investment losses [Satirical]<\/em> \u2013 Acadian<\/a><\/p>\n The UK doesn\u2019t have a productivity puzzle\u00a0\u2013 FT<\/a><\/p>\n Investors do better in target-date funds \u2013 Morningstar<\/a><\/p>\n Does small cap value improve your safe withdrawal rate? [Plus ERE vs The Golden Butterfly portfolio]<\/em> \u2013 Early Retirement Now<\/a><\/p>\n Value is working quite nicely outside of the US \u2013 Morningstar<\/a><\/p>\n Sage investment wisdom from Benjamin Graham x Jason Zweig \u2013 TEBI\u00a0<\/a><\/p>\n Common FIRE traps not to fall into \u2013 The Purpose Code<\/a><\/p>\n The dangers of home bias versus the UK growth agenda \u2013 Archie Hall<\/a><\/p>\n Choosing where to live after financial independence [Slides \u2013 US but translates]<\/em> \u2013 Harry Sit<\/a> [Video version \u2013 Harry Sit<\/a> via Bogleheads]<\/em><\/p>\n To earn the big bucks you\u2019ve got to take the big losses [Research paper]<\/em> \u2013 Morgan Stanley<\/a><\/p>\n Using ChatGPT to optimise your trading strategy \u2013 Quantpedia<\/a><\/p>\n Don\u2019t bet against AI stocks say Wall Street analysts \u2013 Sherwood<\/a><\/p>\n Hedging AI risk \u2013 AWOCS<\/a><\/p>\n Life is harsh (and short) for underperforming funds \u2013 Jeffrey Ptak<\/a><\/p>\n Bitcoin ETFs are up! \u2013 Humble Dollar<\/a><\/p>\n Pudgy Penguin NFT ETF = End Times \u2013 FT<\/a><\/span><\/p>\n If you like risk, you\u2019ll love Bitcoin treasuries \u2013 This Is Money<\/a><\/p>\n How to How the World<\/em> by Andrew Craig \u2013 \u00a30.99 on Kindle<\/a><\/p>\n The Algebra of Wealth<\/em> by Scott Galloway \u2013 \u00a30.99 on Kindle<\/a><\/p>\n The Big Short<\/em> by Michael Lewis \u2013 \u00a30.99 on Kindle<\/a><\/p>\n Skunk Works: A Memoir of My Years at Lockheed<\/em> by Leo Janos \u2013 \u00a30.99 on Kindle<\/a><\/p>\n Or pick up one of the all-time great investing classics \u2013 Monevator<\/em> shop<\/a><\/p>\n Green-hushing: ESG survival strategy in the Age of Trump \u2013 Semafor<\/a><\/p>\n Why batteries make a renewables-powered energy grid affordable [US but translates] \u2013 Construction Physics<\/a><\/p>\n Hybrid electric vehicle sales rocket in the US \u2013 Sherwood<\/a><\/p>\n How AI is infiltrating the movies \u2013 Vulture<\/a><\/p>\n Why AI isn\u2019t leading to mass sackings (yet) \u2013 Dwarkesh<\/a><\/p>\n Trump vs Musk: Gasbags at dawn \u2013 CNN<\/a><\/p>\n Apparently we\u2019re at war with Russia \u2013 Guardian<\/a><\/p>\n Reaction to the UK Strategic Defence Review [Podcast]<\/em> \u2013 Chatham House<\/a><\/p>\n Trump family get into bed with crypto bros [Voms]<\/em> \u2013 WSJ<\/a><\/p>\n How Ukraine\u2019s audacious drone attack stuck it up Putin\u2019s bombers \u2013 CSIS<\/a><\/p>\n The genius myth [Paywall]<\/em> \u2013 Atlantic<\/a><\/p>\n Contrarian views on the big five mass extinctions [Paywall] <\/em>\u2013 New Scientist<\/a><\/p>\n \u201cOwning the stock market over the long term is a winner\u2019s game, but attempting to beat the market is a loser\u2019s game.\u201d Like these links? Subscribe<\/a> to get them every Saturday. Note this article includes affiliate links, such as from Amazon<\/a> and Interactive Investor<\/a>.<\/em><\/p>\n\n
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\u2013 Jack Bogle, The Little Book of Common Sense Investing<\/em><\/a><\/p>\n