Pension Panic and the Three Questions That Always Come Up

Every week, people worried about their pensions ask me the same questions. They’re variations on the same anxieties: “Is the market too high?” “Why are my returns so low with my IFA?” “Can I really do this without losing sleep?” This week was no different.

1. Is the American market overvalued?

 It’s the most common dinner-table worry. The short answer: it doesn’t matter if you own resilient companies. Good investing is like building a house. You don’t panic every time the Met Office forecasts rain; you trust the roof you built to withstand it. Likewise, resilient businesses are designed to navigate recessions, interest-rate swings, even political chaos. You’re not betting on next quarter’s GDP. You’re backing managers who know how to make money in good weather and bad.

Yes, Wall Street looks expensive on a price-to-earnings basis compared to history. But that’s always been the case just before it goes higher. Valuations are not timing tools; they’re like complaining your house is “too expensive” ten years ago and missing out on a decade of rising property values. Valuations alone do not move share prices, if they did you would have the perfect most simple investing algorithm. Momentum, growth also matter. We pay more for stocks which are expected to grow more. So ‘overvalued’ is for simpleton journalists. And if it were that easy Wall St analysts would have predicted the crash of 2008. So build a brick house not one of straw and hope to take it down each time you see a cloud.

2. Can I do better on my returns? I’m only getting 4%.

Of course. Four per cent is basically the financial equivalent of a parking fine: small, irritating, and certainly not enough to secure your future. Over the past century, global equities have outperformed cash and bonds in all but a handful of years. Yes, there will be bad years – 2008, 2020 – but history shows the equity premium exists for a reason. Those who stay invested, rather than hiding in cash, almost always win.

The trick isn’t to chase every headline stock but to systematically build a diversified portfolio of resilient businesses. That’s where people fall down: they confuse “doing better” with “getting rich quick.” Good returns require patience. The best compounding comes from letting time do the heavy lifting, not from trading your pension like a slot machine.

3. But what if I panic? Or get bored?

This is where I come in. I’m not just a portfolio builder; I’m a mentor. Money is emotional. Left alone, many investors sell low, buy high, or switch strategies at the worst possible moment. If you think of investing as watching paint dry, you’ll be tempted to poke the paint. That’s when the damage happens.

A mentor’s job is to remind you that wealth is built slowly, not dramatically. It’s less James Bond, more Warren Buffett. A pension is not meant to be exciting. It’s meant to make sure you can afford to be bored in comfort later in life.

So yes, markets are volatile. Yes, 4% is poor. And yes, without guidance most people sabotage themselves. But that’s why the answer isn’t a stock tip. It’s a mindset: build your financial house properly, trust in resilient companies, and have someone at your side to stop you doing something stupid when the weather turns.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. Past performance is not indicative of future results. All investments involve risk, including the potential loss of capital. Readers should conduct their own research or seek advice from a regulated financial adviser before making any investment decisions.

Alpesh B Patel OBE www.campaignforamillion.com