Friday, August 17, 2012

Newspaper filler isn't filling

If you take a daily newspaper, you may well have read how awful the returns are on one's investments today. And the poor returns of today are not going to improve in the future, or so we are told. I wouldn't bank on it.

I heard from one reporter who took offence at my position. This reporter had written one of the "investment world is coming to an end" pieces that so offend me. No one knows the future when it comes to investment returns. Frightening people with negative scare stories, making them feel powerless when it comes to investing for their future is wrong. It is just completely wrong.

We should be encouraging people to take an active role in managing their retirement funds. They should know enough to judge whether their investments are performing well or not. And if they are not, and they know it, they can take measures to improve their portfolio's performance. No one need accept three percent growth. No one.

The reporter who wrote me was very defensive about a piece they had written on the diminished returns to now be expected from RSP savings. This reporter told me: "I'm not going to tell you I am some financial whiz or pretend to be. I am a middle-class [person] trying to make ends meet.  I was told to get something together under deadline, the same day." They went on to say, "I was assigned [this] out of the blue."

The reporter seemed to think that it simply wasn't fair for me to criticize. I don't work to a deadline. They told me that I have " months to fume, ruminate, dissect and ultimately write" my opinion pieces. Yes I do. And it is a luxury. I admit it.

Still, what the paper ran was wrong. Quite wrong. And I can prove it. I opened a tax free savings plan some months ago and it has done very well indeed. It has delivered fine gains plus very nice dividends. I am up 18.59 percent

My tax free savings plan is up almost 19%.
And how did I pull off this miracle? I went to the library. I took out some books on investing and read them. And, most importantly, I didn't read the newspaper for advice. Unlike the authors of the books I read, newspaper writers (by their own admission) are pumping out words to deadline to fill column inches. All too sad. When I started in the newspaper business in the early '70s, financial page writers were knowledgeable folk who spent their time ruminating on the stuff about which they would eventually report. (My much larger RSP portfolio, with about 32 different investments (stocks, ETFs and mutual funds), is sporting approximately a 8.8% annualized return at this moment. It rises and falls with the market.)

I have heard from readers who protest that those who opened RSPs in the years right before the massive crash of 2008 and 09 are still struggling to recoup their losses. Earning more than six percent annually on their retirement funds is but a distant dream for these people, I'm told.

Curious, I calculated the outcome for a young person who started saving for retirement on January 1st, 2005. This is just a few short years away from the global financial meltdown to come. A conservative type, my young saver put the money in the TD Monthly Income balanced fund and reinvested the monthly payments. (A DRIP plan) They made annual contributions at the first of every year. Today, less than eight years later, they have earned the annalized equivalent of 6.1%. If they'd have put aside $3000 annually, today they would have $46,301.79. They would be well on their way to a successful retirement.

Please read this paragraph from an e-mail from a reporter working at a daily paper.

"You quickly forgot the pressures and stress associated with modern journalism. This ain't the so-called good old days. There aren't 150 people in the newsroom anymore. Our deadlines aren't the next day, they're now. We write for the web, produce videos, tweet and ultimately write at the end of the day for the print record. We cover what we can and work with what we have . . . "

They went on to say that they think they do a fine job. I think, when you take into consideration that they are understaffed, overworked and undertrained for the rich mix of professions they must now juggle, that they do do an amazing job. But amazing is not always fine.

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