Who Controls Your Retirement Nest Egg?

Do You Control Your Retirement Nest Egg?

Most people I know have no idea what is really happening to their Retirement Nest Egg. They have even less idea of where their money is. It could be investing in things they would never approve of. It could be used by their fund managers to trade and game the stock market so they can enrich themselves at your expense. It could be invested wisely too by those few financial advisors who really do look after their clients’ money.

My experience with my daughter’s superannuation retirement fund is a study in subterfuge, obfuscation and a general reluctance to provide any detailed information.

She has a retirement nest egg of about $40K in a fund selected by her previous employer based on what benefited the employer rather than her.

Once a year she would get what was basically a half-page report telling her the fund value. There was no breakdown of what funds the money was invested with, what their performances were. The other items was the fee deducted by the fund for managing her portfolio. The fee was not broken down at all. That was basically it.

When she left her employer the fund took her out of the employer fund and made her a single contributor. When that happened the fees were dramatically increased. I am not aware of her being informed of this.

I discovered all this when I suggested she consolidate her superannuation with her new employer. It took several emails and phone calls to her funds “Help Desk” to get the current status of the fund.

Unfortunately as with many other peoples’ superannuation’s the funds have not recovered as well as the fund managers pay packets, and so she would have to take a significant loss to move her money to her current fund manager.

So she is stuck with paying high fees as a single contributor until her fund managers recreate the wealth they so easily lost in the financial crash.

It strike me that all managed (mutual) funds should be freely listed and traded and if you have a portfolio with a superannuation manager it should be easily packaged up and transported to another superannuation manager without forcing the sale of assets in heavy loss situations.

Help Desk a Wedge between You and Your Retirement Nest Egg

But that might mean these funds would have to work really hard to retain their clients and have a “Help Desk” designed to help them instead of putting up a barrier between my daughter and her retirement funds.

In the end my daughter has no real control over her retirement nest egg funds. She does not know what they are being invested in nor where much of the time. It is easy to say people should take more of an interest in their superannuation but you are paying these people to invest wisely for you and take steps to protect and grow your money.

By the same token it would seem you need to take an interest in brain surgery should you need an operation on your brain. This is shear nonsense.

People are so busy trying to live and create a life for themselves they are an easy mark for financial wizards with massive computer power being able to do all manner of things to hid the investments, the process, the fees and the charges.

The Financial Industry’s mantra is that you should only invest in things you understand. On that basis most people should not invest at all but keep their money in the bank. They can understand the interest being paid in at the end of the month. That is real money too.

Governments Don’t Protect Your Retirement Nest Egg either

If it wasn’t for governments meddling to prop up economies we’d probably be out of this financial crisis right now and making real economic growth including growing your retirement nest egg. Interest rates would be reasonable and inflation down. So bank term deposits would come into their own again for all those people who do not understand the investments they are currently in and that includes most of us.

Remember you control your bank deposits and once the term is up you can take your money to another bank along with any interest without fees, charges or penalties. It’s those fund manager fees and charges that destroy your retirement nest egg over the long term, if taxes and inflation do not do it first.

The problem in the US is there is no interest by design. Keynes hated savings and Bernanke is a Keynes disciple so he thinks nothing of destroying people’s savings in order to try and keep the economic bubble going. The first loss is the best loss despite the pain of it. If people knew there was no such thing as a bailout they would take some steps to protect themselves with savings to use during a downturn. Such a downturn might be sharp but it would be short-lived and bad debts and poorly run business would be liquidated and money begin flowing to the stronger businesses and new enterprises.

If you don’t take steps to control your retirement nest egg, someone else will and you will lose out.

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