I was delighted last night to get in the mail a statement from my financial institution that administers my employer RRSP plan. RRSPs (Registered Retirement Savings Plan) are the Canadian equivalent to American 401(k) plans. They are, in my opinion, a gigantic government Ponzi scheme designed to fleece the anyone who invests in them (mostly the "middle class") while making financial institutions very wealthy.
I think the same is true of the "Tax Free Savings Account," "Locked In Retirement Accounts," "Registered Education Savings Plans" and all the other alphabet soup programs the various governments sponsor or support.
The main reason I say this is looking through the diversified portfolio of mutual funds, I see the annualized rate of return over 10 years is, at best 11%, at worst -1.6%. Just to be sure, there was a nice letter at the end of the statement making it clear that the annualized rate of return was the return over the entire time specified.
In other words, if 10 years ago, you had a poorly diversified portfolio and ONLY invested $1000 in a single on large cap equity fund, today you would have had $1100.
Conversely, 10 years ago, if you had bought nothing but silver when it was $4.40/oz - you would have had 227 ounces which at $33.50 today would be worth around $7600. Even if you bought gold at $300/oz, with $1000 you would have easily had 3.33 oz of gold, which today would be worth around $5700 with gold at $1725.
The government offers all kinds of incentives to trick people into investing in these stupid plans. I simply rest my case that $7600 and $5700 are much higher than $1100.
Because I am eligible for an employer top up into an RRSP, I will take advantage of that plan. As a long term store of wealth, government savings plans are a massive rip off, and I have NO intention of keeping my money parked in it.
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