One of the things that puts a lot of people off investing their retirement savings into global equities (the great companies of the world) is investment volatility.  

The fact the value of their stocks can go down significantly as well as up.  

No one wants to lose money in retirement as there is no new money coming in to top up your savings. You’ve finished working and retirement should be spent enjoying life to the full.  

I would argue however, that an investment in global equities has never lost anyone money. It’s the human investor themselves that can lose the money.  

Investment volatility is just that, the swings of prices up and down. The global stock market has never permanently lost money. It’s the investor that sells through fear or because they need the money to spend that crystallises the loss that loses money.  

It’s why studies like that from DALBAR show a big difference in the investment return and the investor return. The investor actually underperforms their own investments because they usually sell when markets are low and buy when markets are high instead of sticking with their investment and remaining patient whilst the market has temporarily declined.  

I believe there are actually five types of risk more threatening to your retirement lifestyle than investment volatility. 

#1 – Inflation (the rising cost of living) 

Over a 30-year retirement the cost of the goods and services you buy will likely treble.  

Unless your retirement savings are growing at the same level or more than inflation you will be using more of your savings each year just to buy the same stuff. 

This means your savings are likely to run out much sooner than you.  

Over the long-term global equities have average around 10% per year, more than twice the rate of UK inflation.

#2 – Poor returns 

Whilst interest rates offered by bank savings accounts have been higher over the last year or two, they have historically been a lot lower than the average returns offered by global equities.  

Poor savings or investment returns has ramifications for how long your savings will last in retirement due to the fight against inflation (see point one above). 

Poor returns also mean you are not realising your potential in retirement. You are less likely to meet your retirement goals. You might not be able to enjoy as many holidays as planned or be able to gift to your children and grandchildren and what can be worse than that.  


#3 – Complete loss of capital in a single stock 

Where investing in equities can be risky is if you have a high concentration of your money in one stock, owning shares in just one company.  

In 2019 there were only 52 companies in the Fortune 500 list that had been there in 1955. 90% of the companies in this time period either went bankrupt, merged or were acquired, or shrank so much they fell out of the list. * 

It’s definitely the case that you could lose all your money if you invest in just one company.  

The beauty of investing in global equity funds is that you invest in tens of thousands of worldwide companies and if some go bust each year they just get replaced by new companies.

#4 – Investing in something new and exciting 

There will always be something that comes along and creates investing mania.  

A recent example has been investing in cryptocurrency, especially Bitcoin.  

Most people don’t tend to understand how these investments work but there will be a large amount of FOMO (fear of missing out) and you will see lots of stories of early adopters making huge gains.  

Most of the time these bubbles burst, people see huge losses and we find all sorts of issues with these ‘new’ investments.  

Focus on what’s always worked, not what’s working right now.


#5 – Scammers 

Linked to point four above. Sometimes the new hot thing in investing can end up being a scam and again you could lose all your money.  

Scams nowadays can be very sophisticated and the more wealth you have the more you are likely to be targeted.  

Retirement is not a time to be guessing or trialling out something new. If it looks too good to be true it probably is. 


Investing in global equities will be volatile, there can be years where your retirements savings fall in value but 75% of the time returns will be positive. You just need to be brave and optimistic about the future. 

The declines are temporary, but the advance is permanent.  

*Nick Murray’s Scripts 

If you would like to stress test your retirement plans or even to get a plan in place then please get in touch for a free no obligation 15-minute call. We would be happy to review your position, explain where you stand and what you need to do to get the outcome you desire. We have created hundreds of happy and protected retirements over the years. This could be you too.  

Risk warning:

Stock market linked investments and any income from them, can fall as well as rise and is not guaranteed. Any figures quoted are for illustrative purposes and should not be taken as a forecast or guarantee. Past performance should not be seen as an indication of future returns and clients may get back less than they have invested.