Date: 30th November 2023
Author: BETTER FINANCE

For long‐term and pension savers, the year 2022 was undoubtedly a calamitous one. Poor capital market performance and sky‐rocketing inflation across all European Union (EU) Member States resulted in disastrous returns, both in nominal and real terms, for virtually all of the product categories analysed in this report. This comes after a year 2021 that had seen strong equity returns, tempered by already rising inflation.

One or even two years of past performance, however, do not tell us much about the long‐term performance of saving products. What matters for individuals who invest part of their income into those product is how much income they will be able draw from them in the distant future, in particular for retirement purposes. The objective of this report therefore is to provide readers with a long‐term perspective on performance that aligns with the extended investment horizon. We analyse the costs and performance of a broad range of products across various holding periods, spanning up to 23 years.

Over this longer period good years supposedly make up for bad ones. Nevertheless, we observe that many of the product categories do not offer sufficient nominal returns in the long run to compensate for inflation, even with the moderate inflation rates of the 2010s. This weak performance then results in a loss of purchasing power for many European savers and investors.

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