how come pensions lose money and banks make large amounts of profit?

Question

Aren't they supposed to make money in the same way?

Answer 1

pensions make money by investing in equity, banks make money by borrowing at one rate and lending at another.
No, they are not the same.

Answer 2

Which pension company do you refer to. Most of the better known company's like Standard Life, AXA, legal & General, Norwich Union, The Pru etc have had brilliant returns since 2002 before this they all lost money. Thats what investment markets do. they go up and down, in the long term though generally up Have a look at the graph ofthe market crash in 1987 and compaire it to today if you need reasurance on this

Where could you invest £1.00 have the goverment add 22% to it then have the money invested in a largley tax free area? A fairly ordenary property fund last year would have produced about 12- 15% A £1.00 in a building society would have earned about 4-5% and been taxed at 22%. a bank deposit account a dam sight less but still with the 22% deduction

Its a no brainer talk to someone who knows about pensions and do not listen to some idiot giving half a story To answere your question they do not make money in the same way Banks derive nost of there income for charging for there services ie 30 Quid fines if you go over your overdraught by a £1.00 do this for 3 days with TSB and you will end up with a total bill for over £100.00 , not bad for lending out £.3.00 = 300% You work out the annual rate and you would have a fit, thats how these moderen day highway robbers make money.

Answer 3

'A fool and his money are soon parted' ...

Essentially, people are too dumb to run their own finances.

You CAN find good Bank Accounts (ones that pay you Interest) and you do NOT need to go overdrawn every month or spend money you do not have.

You CAN run your own Pension Plan (it's called a SIPP) or if that's too difficult you can put your Pension in an Index Tracker Fund.

Just look at all the stupid Barclay Card holders maxing out their cards , paying 20%+ interest every month and asking for their Credit Limits to be increased ...

Answer 4

Pension companies are in business to make a profit, just like any other company. so they take their commission before even investing your money.
You end up investing slightly short of what you thought you were investing and your returns are based on your investment.
Sometimes the pension fund manager makes a stuff-up and invests in dud company stock. that is why it is so important to chose carefully what you do with your money.
General rule, if you don't understand the concept, don't invest in it.
Go for something that you do understand.
Diversify your investment and consolidate your debt.

Answer 5

1). Corruption.
2). Ineptitude.
3). Hey, it's just redistribution of wealth based NOT ON MERIT, what's wrong with that?