Should our appetite for growth reduce with age?


I hear a lot about “appetite for risk” but nothing about “appetite for growth”.

We are currently experiencing high inflation , some would say stagflation. Stagflation is when things cost more but we don’t produce more – so don’t have the means to earn more.

As Britains grows older- (and we are growing older) – are we giving up on growth, obsessing about risk to the point where we are blindsided by risks we hadn’t entertained – like inflation?

Too old to take risk at 67?

These thoughts come to me after a meeting with someone who described himself as elderly. He is 67 and looked a sprightly 67 at that. And he wanted a second opinion on whether with a SIPP worth £1.6m , he was doing the right thing paying over £40k in fees.

My response was to ask him whether he considered he was getting value for that money and he showed me the growth he’d had on his portfolio in the last two years. I ran that growth against an index that shows the average growth on a workplace pension, net of a fee of 0.75%. (the Sipp is in two parts)

paul h.PNG

The portfolio underperformed the benchmark by a huge amount. Relative to a saver in the growth phase of a workplace pension, he’d lost about £150,000 in value, almost one tenth of his investment.

And yet he was being assured that he had done well. During the period under question , no money had been taken from the portfolio, the person had income producing assets and was still working, in short he had no idea what the purpose of his portfolio was, other than it was appropriate because he was “elderly” that he took less risk.

He was in the “scheme closed” mentality, where income diminishes as risk is taken out of the portfolio. He was losing the growth engine that had got his savings to where they were and shortening his time horizon, as if his doom was impending.

Well that’s what I heard when he told me that he was too old to be taking risks.

1-0 up at half time

Is Britain in some kind of sunset funk? I ask this because so much of my time is spent listening to people who consider that having achieved a degree of wealth, their job is to hang on, consolidate and pull up the drawbridge. It’s like going 1-0 up at half time.

The person who I was talking to, had maybe 30 years left in him. He might have got some extra time added on. Between now and the 2050s when he might expect to die, he is unlikely to see the world economy stop growing, he is likely to see inflation in the cost of his living and the biggest risk he faces to the preservation of his wealth is the erosion of its real buying power. If, as I suspect, a great deal of his money is invested in defensive assets like bonds and even cash, then he is running a big risk of his standard of living falling.

I told him he must talk to his advisor, firstly about the fees and then about what he is doing in a defensive portfolio when his objectives for his money (to pay a replacement income as he withdraws from work) are long-term.

I don’t think he has ever been told that his wealth is under-performing, he struck me as the kind of person who has always out-performed. It was uncomfortable for him to hear that I did not share his adviser’s rosy view of his portfolio’s performance or that the fees he was paying for a fairly lousy set of numbers didn’t look like value for money to me.

It strikes me that this chap has fallen victim to conventional thinking that you should quit when you are ahead. Of course it’s a message that we love to hear, but it can be the wrong message. Actually, life’s real winners are those who keep going to the end of the match.

I implied, that teams who sit back on a 1-o lead, generally find themselves losing it.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Should our appetite for growth reduce with age?

  1. John Mather says:

    In my experience clients underestimate their remaining time I am working on the assumption that I get to 103 as predicted by this Stanford site

    I am 74 so reliant on my hobby business and buy to let properties (not UK)

    I set up two future maturities, both pensions, in drawdown suspended the first one until age 80 and the second at age 86-7. Given the time horizon I am content to remain in growth assets with leverage with major reviews planned. but flexible

    Inflation and repression are of great concern as is the reduction in the the value of the pound as its role as a reserve currency declines and the UK economy drops down the league table. I am keeping a watchful eye on the proportions of fixed expenditure, Tax and Discretionary spending

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