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Enough Bull: How to Retire Well without the Stock Market, Mutual Funds, or Even an Investment Advisor, 2nd Edition by David Trahair

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Chapter 9Retiring Without the Stock Market

OK you’re close to retirement, maybe in your late fifties or early sixties, and used to be pretty well set for your golden years. You worked your butt off and made RRSP contributions even during those years when doing so was very difficult.

You listened to the experts and trusted the stock market. You may have been talked into things like income trusts that you now know are usually high-risk equities.

Perhaps you even diversified geographically. Just like the experts recommended, you put money in the U.S. You put money in China. You also entered the emerging markets.

In a nutshell, you built a well-diversified portfolio of equities and fixed-income investments like government bonds.

And you still got clobbered.

Here’s why. The following list from Bloomberg.com shows the returns of the major benchmark indexes for 2008, converted to Canadian dollars. Remember this is the return for the whole year, the return from the peak reached during June to the end of the year would be worse.

  • S&P/TSX Composite Stock: −33.4%
  • S&P 500 U.S. Stock: −22.61%
  • NASDAQ U.S. Stock: −26.28%
  • MSCI European and Asian Stock Market: −30.08%
  • Emerging Countries Stock: −42.87%

You may even have been unfortunate enough to have had money in companies that went bankrupt. Or perhaps with an investment advisor that could not be trusted.

The sad truth is that your retirement nest egg has been severely damaged even five years after the crash.

Now what?

The Devastating Effect ...

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