Legendary investor Ken Fisher has offered a crucial perspective for retirees and those preparing for retirement: the common focus on “capital preservation” might hinder financial success. In a recent opinion piece for the New York Post, Fisher argued that prioritizing capital preservation could lead to disappointing outcomes for those looking to secure their financial futures.
Fisher, known for his straightforward investment strategies, contends that the principles surrounding capital preservation not only misalign with—but actively conflict with—the growth necessary to maintain a comfortable retirement lifestyle. As inflation continues to eat into the purchasing power of fixed income, his assertion that growth and true capital preservation cannot exist concurrently in the short term becomes increasingly pertinent.
Delving into the complexities of the market, Fisher points to market volatility as a double-edged sword. While many investors view volatility apprehensively, he argues that it is a critical component of long-term growth. Historically, the stock market has shown resilience, with U.S. stocks rising in over 63% of all calendar months and approximately 73% of calendar years from 1925 to 2023. This trend signals that embracing some level of risk may be essential for achieving significant returns.
Fisher emphasizes a vital point: when investors attempt to eliminate the downside risk, they also inadvertently strip away potential upside gains. Strategies that aim to minimize risk often yield disappointing returns—subsisting just above inflation and failing to deliver true growth. Fisher’s critique of financial products that promise both growth and capital preservation frames them as misleading and untrustworthy, labeling them as “phony baloney.”
He firmly advises against investing in insurance-like products or “buffered” funds that seek to eliminate downside while still promising upside. Fisher encourages a pragmatic approach, urging retirees to embrace market fluctuations as part of a long-term investment strategy. For those uncomfortable with the inherent ups and downs of the market, he suggests reassessing personal financial goals, savings rates, and future spending plans.
As economic uncertainties persist, Fisher’s insights resonate with many retirees who seek stability in their portfolios. While the urge to play it safe is understandable, his message is clear: overly cautious strategies might entail greater risks in the face of rising living costs and an extended retirement horizon.
Fisher’s guidance calls for a shift in mindset—acknowledging that genuine growth often necessitates a willingness to endure market volatility. As investors navigate the challenging landscape of retirement planning, understanding the intricate relationship between risk and reward could make the difference between a secure future and financial disappointment.