Those of us in our fifties must fight for every ground we can

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Saturday is my birthday, which real Aussie men ignore in the same way we’d lose an arm to a shark. “Ah, it’s nothing my friend. . . I’ll keep the other beer with me.” What makes it bigger, though, is that my age is going up a notch, which means less time until retirement.

The actuarial window needed to increase my pension is closing fast. As Martin Amis wrote about the fifty years in his novel The pregnant widow (Just read it; don’t bother): “Minutes have often dragged on, but years have tumbled one on top of the other and disappeared.”

It certainly feels that way to me, especially with four toddlers screaming for ice cream. My stated goal of having a seven-figure portfolio before I turn 60 grows more difficult with each rotation of the earth around the sun.

Whereas at age 51 an annual return of 8 percent was required, now I need 9 percent for Project One Million to be delivered. This is already bordering on fantasyland – the long-term real annual return for the S&P 500 is 6.5%, and that’s the best.

Fortunately, I am a journalist and no longer manage funds professionally. So it’s as much about the story as any statistical probability of success. Again, since my last birthday my portfolio has grown 12%. A full head of hair could still be mine.

Indeed, 5% of the world’s multi-asset funds have returned 9% annually over the past eight years, according to LSEG Lipper data. It’s not impossible though, my self managed pension has only grown by 6.8% year to date. I have to move on.

The strange thing is that it comes back sense much better than that. Since January, I’ve made double-digit gains in my FTSE 100 fund. So has the Asian one. Together they make up half of my total pot.

Sure, a quarter of my assets are in Treasuries. But they’re a hedge — bonds rallied nicely during last week’s stock crash — doing what they’re supposed to. I’m actually happy with their 2% yield given how strong the stock has been.

No, the gap between reality and my perception is largely due to the recent crash in Japanese stocks. This reduced my fund’s return from 10 per cent a month ago to 6 per cent today – despite the market’s 16 per cent return.

I also lost track of oil prices in 2024 due to the size of the swings. Nymex crude went from $70 to $87 a barrel in the first third of the year, back to $73 in two months, then rose 14% in four weeks. Only to lose it all again in just as short fashion.

Private Equity loves cheaper money, but the contrarian in me pulls. If everyone thinks borrowing costs are going down, at worst they will definitely go up. At best, lower rates are already priced in. I hope for a cheaper time to buy PE

Also, after having a 13% return last time I looked, I’m surprised to see that my SPDR World Energy fund is now only 4% in the black. No doubt the ESG brigade will applaud this. But remember that lower fossil fuel prices stimulate demand.

What I’m hoping to get from my wife on Saturday morning, then, are some hot investment ideas. I’m still looking at the private equity ETF listed at iShares, however, a recent survey of global fund managers by Bank of America gives it more confidence in lower interest rates over the next 12 months than in any moment of this millennium.

Private Equity loves cheaper money, but the contrarian in me pulls. If everyone thinks borrowing costs are going down, at worst they will definitely go up. At best, lower rates are already priced in. I hope for a cheaper time to buy PE.

Meanwhile, to get a 9% return, every basis point counts. Therefore, from time to time, I like to compare the actual movements of my funds with the indices they are supposed to mimic.

The performance of my portfolio is all that matters in the end, and that includes all fees charged by the platform provider as well as the ETF makers themselves. Exchange rate cheats or tracking errors are also revealed.

Just as my waistline is the bottom line of too many pubs and not enough windsurfing, return on investment should only be measured that way – and of course the industry doesn’t like you doing that.

Take my Asia Emerging Market ETF. The gain since January 6 (there were no entries or exits during the period) is 10.7 percent. However, the index is increasing by 12.3%. Readers may find similar inconsistencies in their own funds.

what’s going on Well, for starters, I’ve chosen an ETF that trades in sterling with a base currency in dollars. The pound has appreciated 1% against the greenback this year, so that’s part of the difference.

Then there are fees, which amount to 23 basis points. I will not have incurred additional trading costs as I have not added or withdrawn money this year. That still leaves more than 30 basis points of unappreciated returns. Not massive, but enough to pay another ETF’s fees.

Also mysterious. As did the fact that my FTSE 100 fund rose 2.3 percentage points more than the Footsie index itself. Then I remembered that the latter does not include dividends and redemptions, while I chose the option to reinvest or “roll up” any payouts.

I also can’t explain other anomalies like why the benchmark is up 7% year to date while my Japanese fund is up 6% despite the yen losing almost 3% of its value against the pound sterling. I should have put only 4 percent.

Not that I’m ungrateful for it – like I have knees that still bend. At 52, I’ll take anything. But my birthday is a timely reminder that I need to take more risks—in my portfolio, if not when I’m swimming down.

The author is a former portfolio manager. E-mail: [email protected]; Twitter: @stuartkirk__