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If you were born in the 5 to10 years following the second world war, then you are part of a large group of people generally referred to as ‘Baby Boomers’ .  This group of people have played a very significant role in the events leading up to the present economic crisis. I was born at the start of the war, therefore not considered to be a part of that group, however, I do, and have shared the same fate.  Saving for retirement, usually meant depositing your cash in a bank or other financial institute with the hope of accumulating funds through interest paid on your savings account or Guaranteed Income Certificates (GIC).  A major change came about when the federal government, became aware of potential funding problems associated with the aging population and introduced Retirement Savings Plans (RSP’s).  They were intended to encourage people to save for retirement by allowing a specific amount of taxable income to be deducted and placed in a RSP, to be taxed at a much lower rate at retirement. I feel that it was at this point that many people became interested in more creative ways to save & accumulate funds. Investment advisers (IA) seemed to appear on cue, they had the great alternative to savings accounts & GIC’s, Mutual Funds…potential investors were encouraged to attend seminars in country clubs and other facilities that exuded wealth. Slide shows, pie charts & graphs showing enormous growth potential in mutual funds, everything sounded wonderful, but…you had to be in it for the LONG TERM. This is the keyword…every effort was made to make sure your funds remained invested until retirement age.  Regardless of the fact that there was no specific term of investment, financial penalties would have to be paid in the event that the funds were removed or transferred to another financial institution. Fund managers were responsible for the well being of your portfolio and their reputations were contingent on the funds performance, and the fee’s that you paid were supposed to reflect that. This was not the case…history shows that higher fee’s did not result in higher returns…and enquiring minds were told only to look at the LONG  TERM.  IA income was  by way of fees & trading commissions, which were on going, giving them continued SHORT TERM gain. An analogy can be drawn to the dentist that does everything to ensure the health of your teeth, as every tooth removed is business lost in the LONG TERM. A few minutes spent calculating a $100.000 deposit in a 15 year term GIC at a very modest 3% interest, would yield a return of over $155.000.  With absolutely no fees to pay at redemption, I’m sure that most ‘baby boomers’ would have preferred the ‘old fashioned’ route of saving for retirement.

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