Federal Finance Minister Christian Lindner has presented his concept for share pensions. Ten billion euros are to be invested every year until 2037 to support the current pension system. Despite all the criticism, this step is exactly the right one. A comment.
What is Stock Annuity?
The share pension is one of the largest projects of the current federal government. Now she has presented Federal Minister of Finance Christian Lindner. Specifically, the federal government wants to invest ten billion euros in a state fund every year from 2023.
The capital gains from this investment should make a decisive contribution to supporting the previous pension system in 15 years at the latest – i.e. in 2037.
Specifically, the coalition agreement states that the statutory retirement age should not be increased, nor should pensions be reduced. In order to achieve this goal, the SPD, FDP and Greens now want to create what is known as generation capital (share pension).
Opposite of daily News Linder explains: “In order to ensure that this commitment is generation-fair, we will start partially funded statutory pension insurance to stabilize the pension level and pension contribution rate in the long term.”
The Germans’ fear of the stock market and the “bad” stocks
Anyone who takes a close look at our pension system quickly realizes that it is on the verge of collapsing. Changes are urgently needed. That is why Christian Lindner’s share pension is absolutely worth supporting.
In contrast to their predecessors, Lindner and the current federal government dare to tackle this delicate but enormously important issue. The fact that they are now being criticized for this in many places is not only unfair, but also not well thought out.
It shows once again the typical behavior of the Germans: First of all, most Germans demonize – exceptions prove the rule – the stock exchange. Stocks are bad. We learn that from childhood. And it is precisely this mechanism that is occurring again now.
The Twitter user “Salty Penguin“ sums up the dilemma and the fickleness of the Germans perfectly.
— Salty penguin (@Alef_Mei) January 14, 2023
Individual stocks do not reflect the stock market
And unfortunately Falko Blumenthal from IG Metall Munich does not seem to have understood the world of stocks either. Or he wants to go with you his tweet intentionally provoke in order to generate attention.
We all have fun with the share pension. Here is our pension scheme using Tesla as an example. pic.twitter.com/WEld6feZOk
— Falko Blumenthal (@falkoblumenthal) January 13, 2023
His statement suggests that Tesla’s stock price decline over the past six months shows what we would expect from an eventual stock annuity. Of course, he doesn’t mention that Tesla shares have gained more than 483 percent in the last five years.
Here again the astonishing ignorance of many Germans is evident. The stock market is not a gamble. It is a long-term game over ten, 20, 30 or even 50 years. Fortunately, Blumenthal is getting feedback from the community.
— Gert Woellmann 🗽 (@Gert_Woellmann) January 14, 2023
— Timo Lokoschat (@Lokoschat) January 14, 2023
DAX and S&P 500 achieve historical returns of over 8 percent
The two leading indices DAX and S&P 500 impressively show how essential the proverbial staying power is on the stock exchange – and how big the profit is for long-term investors.
The leading German index, the DAX, rose by 661.2 percent between December 31, 1987 and December 31, 2012. This corresponds to an average annual return of 8.5 percent. And that despite reunification, the banking crisis, the Iraq war and the like.
The US counterpart, the S&P 500, even grew by 913.6 percent in the same period. In other words, the average annual return even amounts to 9.7 percent.
Long-term investors (almost) always win
Or to put it another way: historically speaking, those who invest widely in the market over the long term will be richly rewarded. Of course, timing always matters.
Anyone who sold all the shares in the Corona crash certainly had to accept some losses. However, anyone who waited just a year longer had also overcome this low. So the great art is to keep calm even in difficult times.
With a view to stock returns, it is therefore all the more important that it is not necessarily politicians who decide on purchases and sales, but rather neutral experts who are not subject to personal or social pressure.