A friend of mine has emailed me his WRAP account Mutual Fund returns for 2008.

My friend had all his retirement nest egg in a WRAP account until recently. It is one of the top fund mangers in Australia. When the market started going crazy in January he became very risk averse as he watched his money disappear. It affected all assets in his WRAP account.

So in February he decided to redeem what he could for minimum loss and ride out the stock market volatility with the rest and hoped to reduce his exposure to equities if the market bounced.

He had a 50/50 balanced portfolio and so pulled out the 50% of his nest egg he had in fixed interest and cash. This is now safely earning 8% interest in term deposits. He’s thankful for that as he now has $21,343.05 in 5 months worth of interest on that money. The rest has been left to the ravages of the markets. Read the rest of this entry »

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The Financial Planning industry has a problem. They want to avoid a large loss of money from their funds under management as Baby Boomers move into retirement and become risk averse, especially in this economic climate.

I read with interest this weekend that in Australia where interest rates are as high as 8.25% on term deposits a whole bunch of fund mangers are now marketing a series of term deposit accounts through their investment platforms.

According to Leng Yeow of the Financial Review the fees for these “deposit account funds” can be as high as 1.55%. Why on earth would you pay a fund 1.55% to have them put your money into a term deposit account? And why would you allow some of that money to be paid as commission to a financial planner supposedly to advise you on your term deposit. In my often to be repeated phrase - it makes no sense to me. Read the rest of this entry »

Well it happened, the S&P 500 is officially is down over 20% and that means a technical recession is occurring. What does it mean to you with your retirement funds taking a serious hit? One thing it doesn’t mean is that you should capitulate and sell all your equity funds and rush to cash. On this one point i agree with the financial industry but with qualifications.

Unfortunately it is too late for that. If you didn’t use a stop loss or instruct your financial planner to exit your funds at a loss acceptable to you, you have now become a genuine long term buy and hold investor.

The financial planning world has got you where they want you. What’s left of your money is safe for them to use and lose testing the market looking for the next bull.

Read the rest of this entry »

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.

Read the rest of this entry »

Thanks for dropping by and taking a look at my blog. As the title suggests it will be all about how to protect your nest egg in retirement.

I’m not talking about all the financial wizardry spoken of by the Wealth Management industry. I’m talking about how your nest egg can disappear over time through things that have nothing to do with the Stock Market. It is my own experience that has motivated me to create this blog and to write an eBook based on my research.

Why should you listen to me? That’s a good question and I hope I can answer it for you on this Blog over time and with my eBook.

First I am in semi-retirement and so my income has been reduced considerably. I do have enough of a nest egg for a reasonably comfortable retirement. At least that is what I thought. I have done my own investing for the last 25 years until last year when I decided to hand it all over to a financial planner via a WRAP account and Mutual Funds. Whilst I was nervous I liked my financial planner and trusted him so in November 2007 I handed over my nest egg to my chosen wealth management team.

I wasn’t looking to make a “killing” I told my planner. I was happy to protect my capital and make 8-10% if I could. This was very conservative I was told. It was strange at first but I wanted to spend my time doing other things. Read the rest of this entry »