Several years ago finance guy came by to pick up my annual RSP contribution. After extolling the benefits of the various funds in my account for a number of years he suddenly put the new money into two totally different funds with a new fund company. Let's call it the Dynamo company. I doubt that I was aware of this when I signed the forms. You know how it is. It’s near the end of February. There’s only a few days left to make a tax deductible contribution. Don’t ask any questions. To quote Larry the cable guy, “just get 'er done”.
For the next several years I received the usual statements indicating the value of my holdings and the progress since making the original investments. By and large, things were going in the right direction, but the Dynamo funds never moved. Well, maybe a fluctuation of one-half of one percent, sometimes up, sometimes down. Interest rates were high and I was sure wondering why I was sitting with two funds that appeared dead in the water while a GIC investment would pay 8 or 9% and my principal would be guaranteed.
Every now and then I would ask finance guy about the Dynamo funds. The answer had something to do with a huge involvement in the Australian Dollar just about the time of my original investment. Just wait for the turn of the Australian Dollar and these puppies will take off!
Well, I held the Dynamo funds for something like ten years before finally rolling them into one of my stronger funds. Ten years. Zero return!
Why would a highly trained, supposedly knowledgeable finance guy be diverted from an established plan to add a couple of unknown, untested funds to a client's portfolio? How many times have I asked that question?
In retrospect, I've come to believe that my RSP investment in that particular year was placed with Dynamo because Dynamo was offering a bonus commission for that particular RSP season. Can't prove it. Will never know for certain but do believe that there had to be a reason.
Have a look at your portfolio. Do you have an orphan fund or two that just don't seem to fit into the overall plan? Maybe it's time to say goodbye.
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AFTER PARKING MOST OF MY NEST EGG IN VERY CONSERVATIVE INVESTMENT ACCOUNTS THERE WASN'T MUCH TO WRITE ABOUT. TPCI IS BACK WITH SOME THOUGHTS AND IDEAS, OTHER THAN INVESTMENT IDEAS, TO SHARE WITH CANADIAN BOOMERS, RETIREES AND SNOWBIRDS.
Nothing on this site should ever be considered to be advice, research or a suggestion or invitation to buy or sell any securities or any other product or service. Every investor should do their own research and consult their own finance guy. See full DISCLAIMER.
About Me
- Stuart Gauld
- 'Retired' at age 47. First went back to work for something to do then continued because the downturn in the market dramatically changed the plan.
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The Passive Canadian Investor
My investing history goes back many years. In May of 2009 I decided to share my story. The purpose of TPCI is to entertain and maybe even inform. If someone sees them self or their finance guy on these pages and makes a positive change, that would be great!
TPCI begins with Investing 101 posted on May 8, 2009 and may make the most sense if read in chronological order. The Blog archive follows.
Enjoy!
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4 comments:
wow, ain't that the truth!
Sounds like you have a mission.
GIC yielding 8 or 9 percent return? Was this loosely based on a version of the truth?
Thanks for commenting. It's always nice to know that someone is reading.
To answer your question, absolutely. Back in the early to mid nineties, deposit rates in the 8 – 10% range were the norm and had been for some time. These levels seemed low to those of us who had come through the eighties. The Bank of Canada rate peaked at 21.03% in August of 1981 and was in double digits for most of the eighties and early nineties.
That's the way it was.
TPCI
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