Jan
2019
DIY investing: The new rule of financial self-reliance
DIY Investor
28 January 2019
‘ne peut pas payer le fera’
When the French government targeted generous retirement terms it could ill afford, thousands of protestors descended on Paris and furious public sector workers brought transport, post and other services to a grinding halt.
One banner read ‘ne peut pas payer le fera’ – can’t pay, won’t do it – yet French workers had long enjoyed a comfortable retirement at fifty five or even younger; this in a country with one of the longest life expectancies in the world.
Mass protests and often violent disorder led to political change and the rise of anti-austerity parties such as Podemos in Spain, Italy’s Five Star Movement and the Syriza party in Greece have given the anti-austerity movement a considerable voice.
However, it is likely that the net effect will be to slow the rate of austerity rather than repel it as budget deficits and the corrosive effect of debt have to be checked; possibly at a rate that is more conducive to economic recovery and growth.
The temptation was to blame anonymous bankers for a financial crisis or blame government for misplaced priorities, but the truth appears to be bigger than that.
Demographic change, pressure on public finances, erosion of trust in big institutions and the power of global markets (the culmination of twenty years of focused policy) have all conspired to change the certainties of life and the opportunities for investors.
The change has not come about as rapidly as perhaps it seems but it is surely clear that there is a change which investors (like everyone else) need to face up to. Well into this second decade of the twenty first century, we have also moved into a new context for personal finance. It is an era that will be familiar for many years to come and requires new rules. The first of these new rules is self sufficiency.
‘we have also moved into a new context for personal finance’
In the aftermath of the credit crunch, a reality dawned on Europeans that had perhaps been known to Americans for years.
In Spain, Greece and France there were national strikes and angry protest not so much over efforts to cut public expenditure but rather over government plans to push up the age of retirement.
In Britain, police clashed with student mobs descending on Whitehall to bemoan the increase in university tuition fees.
The anger expressed in each of these countries was more than the prospect of working for perhaps another year or two; it was more than the daunting future of graduate debt.
Europeans, it seems clear, were facing the prospect of the world they thought they knew, turned on its head.
Americans had a different post-war experience; its baby boomers took advantage of those years in a different way. They have long known the necessity of self reliance and self direction when it comes to financial provision.
In Europe, the safety net of the welfare state, emerging triumphantly from the destruction of war, offered comfort and security for a fortunate generation.
But the credit crunch represented the culmination of a two decade long pressure which, when it burst, meant our economic and working lives would be subject to future flux and potentially unmanageable costs should we not seize the opportunity to take control of our financial destinies.
As pressure mounts on public services and the prospect of austerity stretches into the far horizon DIY Investor is here to help those that want to take control of their financial future, and achieve greater returns than have been available on the high street since the economy hit the low-interest rate doldrums.
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