The long-term investment retirement pension is in U.S. stocks, specifically the S&P 500
One of the best options for your retirement preparation - A long-term investment retirement pension is in U.S. stocks, specifically the S&P 500
We often hear, "Worried about my retirement pension with the stock market crash"...
One of the Korean articles I read, was well summarized overall, so it might be good to read.
“To summarize very briefly, when analysing the top 1% based on the IRP (Individual Retirement Pension) return rate, there were mostly foreign ETFs. About 70% was invested in U.S. ETFs. If you buy a foreign ETF listed in Korea, you get a tax deduction on trading profits. To conclude, I largely agree with the content of this article. Of course, it's true that in recent downturns, much of the previous profits were given back. Nevertheless, I've invested a significant portion in U.S. ETFs, especially those composed of the S&P 500. There might be other good ETFs, but if you can't decide on a single good fund and don't want to worry about it, just go with a passive fund - S&P 500!"
Even Warren Buffett said at the 2020 Berkshire Hathaway annual meeting that the best investment method for most people is investing in the S&P 500. I strongly agree. I think it's an excellent choice, especially if you're looking at it as a long-term investment like IRP.
Looking at the figures since 1993 from Investopedia, there have been ups and downs, but it shows a stable upward trend. I won't specifically include the annual average calculation as it can change depending on when you calculate.
On the other hand, let's look at KOSPI. Comparing the two indices directly might be a bit of a stretch, but it's good for reference. You'll probably see a similar chart if you look at KOSPI 200.
So, why U.S. ETFs, especially the S&P 500? It contains 500 of the world's most prestigious companies. Investments are made automatically based on their proportions. If a company falls out of or enters the top 500, it automatically flows into my fund. The fees aren't that high. (You should look into this part carefully; I chose the SPDR (SPY) fund from the S&P 500. Warren Buffett chose Vanguard's S&P 500 VOO). My retirement pension account can only purchase-related ETFs listed in Korea (banking sector). So, please inquire directly with your IRP company or check online.
If you're unsure or can't be bothered, consider the S&P 500. If it's an IRP individual retirement account, I think investing in the S&P 500 is perfectly fine. You can invest up to 70% or adjust the ratio as you see fit. I've struggled a bit because of the retirement pension return rate. Thanks to well-chosen ETFs, there were times when the annual return exceeded 10%. However, during market fluctuations, I ended up giving back profits. And then, I switched to the S&P 500. It might not be as thrilling as a roller coaster, but you can sleep well at night and wait comfortably.
"This is not for the sale or solicitation of a specific product, nor for investment advice. Investment depends on the wise judgment of the investor."