Australian Dollar - Possible Bad News

[JJReyes]

At one time I liked mutual funds because they are a no brainer. Let someone else who is knowledgeable think and worry what to do with my money. After the market collapse in 2008, I did a look back and adding all those fees they charged for managing our money (my wife and I have separate and joint accounts), it was over $50,000! Worst, the so-called experts were no better picking stocks than I was. In fact, our DRIPs (Dividend Reinvestment Plan) stocks did much better over the long run than the people managing our money.

 

Of course, what lured us in was the companies kept advertising that such and such fund consistently made 20% per annum over 5 years. What they failed to explain was some of these mutual fund companies had 1,500 different funds. Of course, some performances were spectacular, most were mediocre or no better than the S&P 500 average, and a significant number were downright losers. The ones advertised were the best performers. No one even wanted to admit they had losers, lots of them.

 

Another problem was the stockmarket was rising from the sheer volume of money entering from baby boomers preparing for their retirement. The situation has changed. Starting January 1, 2011, those same baby boomers are retiring at the rate of 10,000 per day. Rather than adding to the stockmarket through savings, 401Ks, IRAs, etc., the baby boomers will start withdrawing as they retire.  

 

It's a similar problem with the Philippine stock market. We know markets go up and they go down. The problem is we don't know when. I am rewarded or penalized not by what happened in the past (the market went), but what will happen in the future (the market might go down).

 

My instinct is to be contrarian. We bought in with our cash reserves when the Dow Jones was around 7,800. Is it time to sell when the Down Jones average is above 15,000? It's a scary rollercoaster ride. I wish I was the gentleman in Japan with $300 million is a postal savings account that is losing value everyday.

Edited May 9, 2013 by JJReyes

[Curley]

Gold prices plunged after the large speculators dumped it. Watch it rise over the next 12 months as nations devalue their currency. Devaluation is so simple to do and so tempting. Just print more money. Since most governments are in debt, you are repaying the lenders less.

 

That depends on the currency in which your debt is held. A lot of weaker countries borrow in dollars so devaluation does not help your debt.

[OnMyWay]

At one time I liked mutual funds because they are a no brainer. Let someone else who is knowledgeable think and worry what to do with my money. After the market collapse in 2008, I did a look back and adding all those fees they charged for managing our money (my wife and I have separate and joint accounts), it was over $50,000! Worst, the so-called experts were no better picking stocks than I was. In fact, our DRIPs (Dividend Reinvestment Plan) stocks did much better over the long run than the people managing our money.

 

Of course, what lured us in was the companies kept advertising that such and such fund consistently made 20% per annum over 5 years. What they failed to explain was some of these mutual fund companies had 1,500 different funds. Of course, some performances were spectacular, most were mediocre or no better than the S&P 500 average, and a significant number were downright losers. The ones advertised were the best performers. No one even wanted to admit they had losers, lots of them.

 

Another problem was the stockmarket was rising from the sheer volume of money entering from baby boomers preparing for their retirement. The situation has changed. Starting January 1, 2011, those same baby boomers are retiring at the rate of 10,000 per day. Rather than adding to the stockmarket through savings, 401Ks, IRAs, etc., the baby boomers will start withdrawing as they retire.  

 

It's a similar problem with the Philippine stock market. We know markets go up and they go down. The problem is we don't know when. I am rewarded or penalized not by what happened in the past (the market went), but what will happen in the future (the market might go down).

 

My instinct is to be contrarian. We bought in with our cash reserves when the Dow Jones was around 7,800. Is it time to sell when the Down Jones average is above 15,000? It's a scary rollercoaster ride. I wish I was the gentleman in Japan with $300 million is a postal savings account that is losing value everyday.

 

Yes, most people do not realize how much the funds can take away from your earnings with their expenses.  Probably the average employee with money in a 401k or similar tax sheltered account does not have any idea about the expenses of each fund.  Over a long period of time, the expenses eat away a huge amount of gains.

 

The new ETF products have much lower expenses and are easier to trade in and out of quickly, if needed.

 

The market is super high right now in most regions and everyone is waiting for a crash or pullback.  I have only a small % in equities and I am ready to sell any time.

[Curley]

Don't worry, while some downward pressures on the AUD may apply a 15% drop or anything like it simply will NOT happen, unfortunately. 

But Brett if you intend moving to live in the Phils in the future, you may do well to look at investing now in Philippine Stocks via the PSE. The PSE index over recent years has shown steady growth far better than most other investment opportunities.

If you're planning to live in a different country then it is advisable to have your savings in the currency that you will be spending...... you are then protected from currency fluctuations. How many times on here do we read of people waiting till the exchange rate "goes up again". Crazy! I'm off to Colombia and my money will be invested in blue chip companies in their stock market. I won't have to worry about what the pound/dollar/euro are doing, all I want is to know that I will have local money for a rainy day. My pensions unfortunately will be paid in Euros and pounds and I will have to accept any changes in the exchange rate.

[Curley]

 

At one time I liked mutual funds because they are a no brainer. Let someone else who is knowledgeable think and worry what to do with my money. After the market collapse in 2008, I did a look back and adding all those fees they charged for managing our money (my wife and I have separate and joint accounts), it was over $50,000! Worst, the so-called experts were no better picking stocks than I was. In fact, our DRIPs (Dividend Reinvestment Plan) stocks did much better over the long run than the people managing our money.

 

Of course, what lured us in was the companies kept advertising that such and such fund consistently made 20% per annum over 5 years. What they failed to explain was some of these mutual fund companies had 1,500 different funds. Of course, some performances were spectacular, most were mediocre or no better than the S&P 500 average, and a significant number were downright losers. The ones advertised were the best performers. No one even wanted to admit they had losers, lots of them.

 

Another problem was the stockmarket was rising from the sheer volume of money entering from baby boomers preparing for their retirement. The situation has changed. Starting January 1, 2011, those same baby boomers are retiring at the rate of 10,000 per day. Rather than adding to the stockmarket through savings, 401Ks, IRAs, etc., the baby boomers will start withdrawing as they retire.  

 

It's a similar problem with the Philippine stock market. We know markets go up and they go down. The problem is we don't know when. I am rewarded or penalized not by what happened in the past (the market went), but what will happen in the future (the market might go down).

 

My instinct is to be contrarian. We bought in with our cash reserves when the Dow Jones was around 7,800. Is it time to sell when the Down Jones average is above 15,000? It's a scary rollercoaster ride. I wish I was the gentleman in Japan with $300 million is a postal savings account that is losing value everyday.

 

Yes, most people do not realize how much the funds can take away from your earnings with their expenses.  Probably the average employee with money in a 401k or similar tax sheltered account does not have any idea about the expenses of each fund.  Over a long period of time, the expenses eat away a huge amount of gains.

 

The new ETF products have much lower expenses and are easier to trade in and out of quickly, if needed.

 

The market is super high right now in most regions and everyone is waiting for a crash or pullback.  I have only a small % in equities and I am ready to sell any time.

 

Very true, there have been moves to try to curb the funds from selling amongst themselves in order to earn commissions....... it is a major source of income for them!

[Curley]

For my first business I borrowed money at 18% interest................. now that I have some cash, interest rates are at an all time low! Sods law!

[Thomas]

Of course, what lured us in was the companies kept advertising that such and such fund consistently made 20% per annum over 5 years. What they failed to explain was some of these mutual fund companies had 1,500 different funds. Of course, some performances were spectacular, most were mediocre or no better than the S&P 500 average, and a significant number were downright losers. The ones advertised were the best performers. No one even wanted to admit they had losers, lots of them.

Yes. Many disolutions can be made with PARTS of statistics.

 

In Sweden most of the retirement pay is handled by the government, but a part of the deductions from salaries for retirement funds are handled by private funds, which each person can chose himself, so such phone marketers "terrorise" us. Around this time of the year two years ago, one such said:

-Our fund have raised 18 % !

But it was TOTALY since they started 2006...    so it had taken them 5 YEARS to reach what I had myself in 5 MONTHS that year   :hystery:

It's a similar problem with the Philippine stock market. We know markets go up and they go down. The problem is we don't know when.

Well. Yes, sometimes, but sometimes it isn't hard to predict a comming fall, even if not knowing how soon.

(E g I predicted both the fall 1987 and 2000 a half year in advance.)

Not so hard when it's bubbles. Different when a fall is triggered by things as terrorist attack against World Trade Center, or when idiots within the banking system FREQUENTLY use functions they don't understand (as with the last fall triggered in USA).

 

--

Perhaps I will start a "fund" Filipin style, after I have moved there   :)

One similar have very good results - at least for the founders*  :)  - but before I start I will need to check more proper how much it will make normaly for the share holders. Sure they will get profit in the excisting one too, but I don't know yet if the share holders will get good percentage "dividend" there.

 

*I'm sure I can make significant MORE worth shares, for 30 % LESS start price than the excisting "fund".  

But I don't tell what it is yet  :)   before I can start myself, so I don't get competitors, which can start before I'm ready.

[BrettGC]

 

Don't worry, while some downward pressures on the AUD may apply a 15% drop or anything like it simply will NOT happen, unfortunately. 

But Brett if you intend moving to live in the Phils in the future, you may do well to look at investing now in Philippine Stocks via the PSE. The PSE index over recent years has shown steady growth far better than most other investment opportunities.

If you're planning to live in a different country then it is advisable to have your savings in the currency that you will be spending...... you are then protected from currency fluctuations. How many times on here do we read of people waiting till the exchange rate "goes up again". Crazy! I'm off to Colombia and my money will be invested in blue chip companies in their stock market. I won't have to worry about what the pound/dollar/euro are doing, all I want is to know that I will have local money for a rainy day. My pensions unfortunately will be paid in Euros and pounds and I will have to accept any changes in the exchange rate.

 

Unfortunately I don't have a choice mate... My military pension is paid in Australian dollars.  Can't even have it deposited into a foreign bank :/

[Curley]

 

 

Don't worry, while some downward pressures on the AUD may apply a 15% drop or anything like it simply will NOT happen, unfortunately. 

But Brett if you intend moving to live in the Phils in the future, you may do well to look at investing now in Philippine Stocks via the PSE. The PSE index over recent years has shown steady growth far better than most other investment opportunities.

If you're planning to live in a different country then it is advisable to have your savings in the currency that you will be spending...... you are then protected from currency fluctuations. How many times on here do we read of people waiting till the exchange rate "goes up again". Crazy! I'm off to Colombia and my money will be invested in blue chip companies in their stock market. I won't have to worry about what the pound/dollar/euro are doing, all I want is to know that I will have local money for a rainy day. My pensions unfortunately will be paid in Euros and pounds and I will have to accept any changes in the exchange rate.

 

Unfortunately I don't have a choice mate... My military pension is paid in Australian dollars.  Can't even have it deposited into a foreign bank :/

 

If you check my words.... I said savings not pension. Have you checked out foreign exchange companies that offer online banking in Oz? I use Moneycorp for my UK pension, it costs me 4 quid to make a transfer and they give me a better exchange rate than the banks. It may be worth checking out.

[BrettGC]

 

If you check my words.... I said savings not pension. Have you checked out foreign exchange companies that offer online banking in Oz? I use Moneycorp for my UK pension, it costs me 4 quid to make a transfer and they give me a better exchange rate than the banks. It may be worth checking out.

 

 

Ahh, with you now :)