Investing 101

How many of us relied on our financial advisers for years as they practiced Investing 101 with our life savings? What is Investing 101 you ask. Well, it varies from day to day or finance guy to finance guy but basically it goes something like this;

They develop a personalized plan, especially for you...interesting thing is, that it's the same plan they've been using for everyone in the past ten years. With slight variations they highly recommend an asset allocation involving 20% Canadian equities, 20% US equities and 20% Global equities. For the final 40% they strongly suggest that half be invested in something very secure...not a guaranteed instrument, that wouldn't pay nearly enough commission, but something like a balanced fund or Blue Chip dividend fund. They then get really creative with the final 20%...emerging markets, small cap, resource fund etc.

The advice is that with this type of allocation you can never be hurt as all these markets will not go down at the same time...until 2008 that is. The trouble is, you never actually make real money with this portfolio as there is seldom more than half your money moving in the right direction...but, we Canadians thought we were doing great since the bounce after 9/11. Surely our portfolio was outperforming money markets or guarantees. Yup, it was...for a few years.

I do not intend to offer advice in this blog. I established it solely to share some insight and anecdotal research with fellow Canadians many of who have had retirement plans shattered in the past two years.