A Baby Boomer friend of mine has sent me his WRAP Account results through to June 2008. We both decided in November 2006 that we would hand our retirement nest eggs over to the “Professionals” so we could spend our time doing other things as we move into semi-retirement.

Our retirement nest eggs were put straight into a diversified portfolio of mutual funds within a few days of giving our financial planner our money.

It turns out that our timing could not have been any worse. From November 2006 through to November 2007 the markets became more volatile. Property was in the doldrums already but then we got hit with International fixed interest losses because the Aussie dollar was rising against the US Dollar. Then we got hit again with dropping interest rates in the USA. The International share losses offset the Australian share gains to give us zero returns.

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We all know the mantra espoused by the wealth management industry about the need for us poor dumb investors to buy and hold because there is no way we can time the market. Yet these very people are doing just the opposite with your money, desperately trying to get returns in a falling market to help justify their high fees and charges. This is what I call Buy and Hold Hypocrisy.

Unfortunately you have to be a very good trader or a mug trying to time this market. The usual statistics apply. Probably less than 5% of wealth managers are any good at market timing. Most of them make their money picking winners in rising markets. In a falling or sideways market they have to be much more nimble and that can be hard to do with large amounts of money to trade (Silly me - I mean invest). Read the rest of this entry »

When in retirement you can have your own personal recession. How? Well look at the numbers.

• Inflations of 4%
• Fees of 2%
• Pension of 4%
• Market Drop of only 10%

Total drop in your nest egg value is 20%.

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Have you noticed that whenever you talk with a financial planner they talk in terms of certainties. But when you sign the investment documents they point out that there are no guarantees the things they told us before may apply?

Do you go to a car showroom and hear them tell you all the great things about their cars but as you drive it out of the showroom do they make you sign a waiver and tell you the car may not work as stated. It may stop as soon as you leave the driveway, the doors may fall off, the engine may not reach the speeds they said it would. Read the rest of this entry »

So much for safe, steady as she goes, buy and hold long term investment of your nest egg. Do you know your retirement funds may be contributing to the Oil Price bubble? Your trusted wealth managers may be telling you to have a conservative balance portfolio in retirement whilst they speculate in oil with your money.

“A pension fund is supposed to be investing money in secure, stable investments for the benefit of the people whose money they are investing,” said Dan Lippe, an energy analyst at Houston-based Petral Consulting Inc. Retirement Funds Plowing Cash into Oil

I’m really not sure of the ethics of this. It is supposedly well intentioned and aimed at protecting your nest egg to some degree against inflation and the loss in value of the US dollar. However I am more of the view they were chasing their bonuses on what looks like a sure thing riding the oil trend, just like the housing bubble. They get their bonuses every quarter in real cash. They cannot be trusted.

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The DOW is only 0.8% off 20% losses the technical level for declaring a Bear Market. What does a Baby Boomer do now?

In these volatile times cash is a position for Baby Boomers in retirement. But it may be too late to exit those poor performing buy and hold mutual funds.

It is time to review your retirement nest egg and consider each investment. If there are significant losses in some of the investments then it makes no sense to sell them right now. But if you have some investments down around 10% it might be worth considering putting them into cash.

This will at least provide you with some income to hopefully ride out any further market turmoil without forcing you to sell those investments with large losses against them.

It may be best to look at the Fixed Interest/Income Investments first. Read the rest of this entry »