“Our entire (financial) system, led by banks but known primarily by insurance companies, investment firms and hedge funds, is based on reasonable levels of return and expectations,” writes Bill Gross, head of investment firm PIMCO, in a monthly report. Now, he believes, this model is under attack: the rates and, accordingly, the cost of money on the market are too low.

“When the cost of credit is so low that the return does not justify the risk...then the system grinds to a halt, becomes distorted, or even collapses,” Gross writes. The Federal Reserve has kept rates near zero for years in hopes of strong economic growth. So far, according to Gross, the results have been small.

What does the instability of the financial system mean for the average investor? First of all, a drop in income, says Gross. “(How to behave)? Caution, recognizing that past gains are in the past... Both stocks and bonds will be much less profitable,” he writes.

Here's Gross's advice for the private investor: balance your portfolio according to age - the younger you are, the more stocks you can buy, increase the share of bonds over time; if the money is invested through funds - find those in which management fees are minimal - the profitability will be too low to afford unnecessary expenses.

“The era of credit expansion, which ensured returns above 10%, is over. We are now facing an era of inflation, which usually hinders the growth of securities, both stocks and bonds,” concludes Gross.

Bill Gross: Investors, be very careful