I'll admit it. I was one of those idiots who had my money invested in the stock market when the great "Re-Adjustment of 2008" (as my investment advisor referred to it) occurred. What I was gambling with, although I didn't know at the time it was gambling, was my retirement fund. A quick fast forward to the punch line to this joke - I am still working. Freedom 55 is a signpost I passed some time ago; I'm just hoping for, Not Having to Eat Cat Food 75.
Being descended from a people who have vendetta firmly woven into their DNA, I have embarked since 2008 on a quest to determine who was at fault. I accept my share of the blame - please refer to the "idiot" mentioned in the second sentence of the first paragraph. However, I know I did not act alone, there was a second shooter on the grassy knoll.
And the second shooter was the investment community. The advisors, the big investment companies, the talking heads on TV, the banks and the politicians. For a group of people who are supposed to be pretty smart, they did a lot of really dumb things. And as I have educated myself to watch what they do and figure out what they are saying, I have discovered that no one in charge is looking out for our best interests. We desperately want to believe that someone is at the controls, carefully manoeuvering our individual nest eggs through the financial jungle but it just isn't so. Let me give you an example.
I had my retirement nest egg invested in mutual funds with a large investment firm. One of the only things that an individual investor can control is your asset allocation.
This is how much money you have invested in things like equities - the stock market and fixed income - bonds and GICs. The equities are far riskier, but potentially offer bigger gains. Fixed income is much safer, although you won't make as much money. The rule of thumb is that you should have the same percentage of fixed income in your portfolio as your age. So if, for example, you are 65 and ready to retire, sixty-five percent of your investments should be in fixed income, thirty-five percent in equities. (I learned about asset allocation, on my own, after I lost my money.)
When the market crashed in 2008, I was a year from retiring. My asset allocation, unbeknownst to me since this is a "minor" detail an investment advisor is not obligated to share with you, was 95% equities or stocks, 5% fixed income. So, when the "stock" market fell, you can understand why my portfolio virtually disappeared over night. All the risk questionnaires I had filled out with my investment advisor had me as a moderate risk-taker. My advisor knew I was about to retire. The company's own guidelines state that no investor should have 95% equities. And yet, somehow, with the idiots in charge, my asset allocation, along with my retirement, slipped through the cracks.
A fine ending to this story would be that those in charge offered me my money back. Ha, ha, ha and LOL. Investment companies never, under any circumstances, give you your money back. After all, how would they ever calculate their commission on that?
