Friday, May 25, 2012

Poor advice, retirement and risk aversion

Nothing gets me more upset than listening to someone give bad financial advice.  I heard someone talking to an older gentleman the other day about investing.  The guy talked about how he was interested in purchasing gold for his portfolio.  He said he invested only in bonds and CDs.  He said he doesn’t like losing money.  The financial advisor began to talk about how they are believers in capitalism and thinks that America isn’t big on capitalism anymore.  He thinks that internationally capitalism is growing.  He told the man if it were him he’d buy an international mutual fund.  I couldn’t believe what I heard.

First of all, from my training at Fidelity, you would never steer someone with this type of risk tolerance to something that is extremely risky!  Looking at my January/February TSP Highlights newsletter I looked at the performance of the different funds. The international fund had a negative return of -42.43% in 2008, positive 30% in 2009, positive 7.94% in 2010, and -11.81% in 2011. Unless the goal was to give this man a heart attack I’m not sure why this advice was given.

Here is a different point of view from one of my favorite authors.  His point is it’s your money.  Do not give it away.

Everyone probably has heard about Occupy Wall Street by now.  Let me ask you this…why aren’t people in this group targeting the 401k?  Like Robert Kiyosaki said…it is your money!  Why are we sending it to Wall Street?  This doesn’t make any sense to me.

Worse is that you have to PAY to get YOUR money from your employer.  I’m glad the Military doesn’t do this.  I hope they never do…otherwise I’m afraid there wouldn’t be any incentive to staying in the military long term.  Putting your necks on the line means you should get paid.  I don’t care if it is a volunteer military…this doesn’t mean you shouldn’t get properly compensated.  America’s wealth is in it’s rich land and it’s diverse citizens that reside here.  I want America to remain strong, and I want to take care of our biggest assets which are the men and women in uniform who serve this great nation.  After your service is up, you will continue to do great things.  Hopefully through this blog, books and your personal thirst for knowledge you will be able to take your new skills to even greater heights.

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