Legendary investor Ken Fisher has a message for retirees and those planning to retire: The allure of “capital preservation” may disappoint you financially.
Fisher, known for his no-nonsense approach to investing, argued in a New York Post op-ed published Monday that the concept of capital preservation — often touted as a haven for retirement savings — is fundamentally at odds with the growth needed to build a maintain the economy. comfortable retirement.
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“Growth and true capital preservation cannot coexist in the short term,” Fisher explains. He said what many consider “safe” investment strategies often fail to keep pace with inflation, potentially eroding purchasing power over time.
The core of Fisher’s argument lies in the role of market volatility. While many investors view volatility as a threat, Fisher sees it as essential for long-term growth. He said that historically, U.S. stocks have risen 63.1% of calendar months and 73.5% of calendar years between 1925 and 2023.
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“Eliminate the [downside] and the [upside] also disappears,” Fisher said. He argues that attempts to completely avoid market fluctuations usually result in ultra-low returns, which barely exceed – or even lag behind – inflation.
The investor focused on financial products that promise growth and capital preservation, calling them “fake.”
“Investment strategies that promise both growth and capital preservation are nonsense,” Fisher said. “Yet so many sellers in various forms – especially in difficult times like this summer – say the opposite and sell poor products that are destined to disappoint.
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He warns investors to be especially wary of insurance-style “buffered” funds and any product that claims “an upside without downside.”
Instead, the investor advocates a clear approach to pension investing. He urges investors to understand that short-term volatility is the price of admission to long-term growth. For those who can’t stomach the ups and downs of the market, he suggests reevaluating financial goals, savings rates and future spending plans.