When I retired, I had a bit of money to spend. After putting aside some for holidays, moving house, grandkids, Sugar Puffs, etc, we invested the rest.
Here was my thinking - the economy was apparently facing a downturn. Bank interest rates had already begun to drop. A whole range of interest rates had just plummeted, but, although many had climbed a little, they had then leveled off. Previously favourable options, such as building societies, local councils, etc were also not offering much return (there were I think at the time only a few, obscure councils still looking for investments). And house prices had begun to show signs of peaking. If I put my money in an interest-bearing bank account, or similar, I would receive a regular, but only very small return. So the answer seemed to be to engage the bank's investment portfolio manager.
Of course, banks are in such bad odour at the moment that today my decision sounds like a stupid idea. At that time, it seemed quite prudent. What happened next was that the manager deducted his hefty fee from my investment up front and the value of my remaining investment then fell through the floor. It has just recently looked as though it might be rising again, but, if I withdraw it now, we still don't have invested even the amount we first handed over.
We haven't just sat here miserably of course: we have constantly chased up the managers, discussed other mixes of investment, even complained to the Ombudsman. My contention is that everyone knew the market wasn't continuing to do well, but engaging an expert manager would guarantee my money would do better than if I, an amateur, stuck it in a low interest bearing account. As it happens, I was quite wrong - putting it in the building society, or even leaving it in the bank, would have been better than giving it to the investment manager.
The managers of my money have the following excuses - we are in a world recession, no one could have foreseen a world recession, the Euro is struggling, that makes the growth of European investments poor, shares indices have all fallen, property prices have foundered and not picked up. My reply - yes, but, given all these problems, which I was paying you to overcome/avoid, why didn't you put my money into something that wasn't recessing/struggling/poorly/foundering, etc? Naive, aren't I. If they had just stuck it in the bank, it would have done better than it has. And I would probably be praising their foresight and management skill now.
The Ombudsman, by the way, studied all the papers and concluded that the investment manager had done nothing wrong, since investments can go up and down. Er . . . yes, so I should only expect success if the market is rising anyway? What am I paying for then? In a rising market, I could have cut out the expensive middleman and bought my own shares. The manager actually did three things wrong - he called himself 'an expert'; he moved my money from an interest-bearing bank account to what has turned out to be a worthless bunch of shares, something I could have done quite well by myself and he charged me a fee for losing my money.
Why am I telling you this? Well, I have just received a glossy booklet from the bank with masses of facts of and figures and graphs and pie charts, showing how my money has lost value. It then has a Twitter-like tweet from each portfolio manager, a commentary on the present position of the market, designed presumably to boost your confidence in them as managers, or advisers, or insightful commentators, or just plain bright people. I shan't bore you with them all; here's just one to give you a flavour of their expertise:
'Approaching a point where we can see a possible way through the economic crisis.'
In English, the sort you and I speak everyday, this appears to mean, 'we can't yet see what to do.' And guess what? I'm approaching a point where I can see a possible way to trust them.