Thursday, November 13, 2008

Give me your funny paper

I have the American version of a pension scheme, an IRA. They're simple. All your life you put your own money into buying stocks and bonds, and when you retire you have a fortune, it says here. I'll avoid going into the similarities between everyone getting rich by putting money into stocks and everybody getting rich by putting money into one-armed bandits for the moment. (It's not like I had no choice; I mean, I could have put it into houses instead...)

Anyway, the IRA's robot sent me a warning email today. It said, "[I]t may be time to revisit your plan. The equity portion of your investments is currently at 30.91% and your current target asset mix suggests that 70.0% may be more appropriate." Which is good advice.

The really sad thing is, two months ago I did have 70% of my retirement money in equities. I didn't sell them. They just lost so much value that the few bonds I own overtook them. In other words, I'm screwed. My retirement account has lost a fortune in hardly any time at all. I daren't look to see what the actual damage is.

Should I believe the robot and buy more equities? After all, they're cheap. Or should I just find finance workers and, hanging them up by the feet, collect the coins that drop out of their pockets? Yes, that seems much more satisfying.

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