Donald McKeon (Jerry)
Donald McKeon
(Jerry)
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Dmitry Selemir
Hi Jerry. On the one hand what you are saying there makes total sense, on the other I can give you an interesting example from my personal history (granted, shorter than 40 years but still :)). I was born in Soviet Union, back when it was still very much going strong. My grandparents made a very nice gesture, both when my sister and I were born — setting aside a considerable amount of money at the time — 1000 roubles for each of us. Back then it really was quite a lot of money. Nearly 5x what our parents use to earn per month (both scientists). The money went into a bank account to be available for us when we turned 16 (or maybe it was 21, I don't remember now). It would have collected a nice annual interest rate as well... Of course the country went bust in the meantime, with 1000 roubles,  from the amount that could buy you a small car turning into a small change, not enough to buy a loaf of bread... I guess for us it wasn't such big deal, we were young and it's not like it was something we really counted on. Having said that, for a lot of older people — that happened to their life savings. They lost everything, which was made worth by the fact that you couldn't really own any assets at the time to offset that. Anyway, what I am trying to say is — while it's good to plan ahead and invest into a private pension — it is far from sure bet and it makes sense to consider alternatives. This could happen to any currency, USD is no longer as safe as it used to be. On top of it, pension funds have a serious problem on their hands — ageing population, lower employment rates for young people and also increased longevity (which in itself is pretty expensive) — all these are yet to really kick in. There is no magic pill unfortunately — used to be properties and land, but the recent crash put a dent into that, stocks can be a very mixed bag too — you really have to invest a lot to achieve high enough diversification to make it somewhat safer, currency diversification is a good idea too. If the plan is to save for 40 years — you really have to consider all possibilities, a lot can happen in that time.