Investments and the Mysterious 8 %

I was watching CBC news yesterday and saws a clip about investing in RRSPs. Apparently 40 % of Canadians will not be investing in RRSPs because of the economic climate.

The bank spokeswoman went on to say that this would be a good time to buy because the cost per unit is down. Then the reported talked about how not investing $2500 at 20, 30 and 40 years old could result in thousands of lost dollars at the time of retirement **assuming an 8 % rate of return**.

That was the kicker **”assuming an 8% rate of return”. Where am I going to get an 8 % rate of return ? Currently my RRSPs have had a negative rate of return, but I have gained slightly (not at 8 %) since starting. I don’t really understand this as I actually have less money in the account than I originally put in.

But, this is the funny math of the financial sector. This is the sector filled with Enrons and World Banks. A system rife with accounting fraud and collapsing in on itself because of outright greed. Yet, their best advice is to invest more.

I feel as if I have been sold an illusion of modernity. The numbers of finance and trade all seem to be smoke and mirrors, cooked up in many board rooms and designed to disguise and steal. It is a system built on greed and services only that end – the making of money. Respecting the social good, and the environment do not seem to be of concern.

Now as the cancer economy slows down, the immediate response is to keep the fires burning. Very little thought has been given as to why we have gotten here in the first place. I do not just mean the financial sector, but the whole of it. We are awash in pollution(chemical, plastic, and advertising), straining the earth’s ability to produce food, drinking up the last of cheap oil, sitting in cities that make us unhappy, and destroying the very foundations that feed, clothe and shelter us.

I wonder if we can actually make an 8% return of investments when the true costs of the modern system are paid. Of course the news story did not cover the wider concerns -they never do.

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One response to “Investments and the Mysterious 8 %

  1. dnorman February 8, 2009 at 7:04 pm

    All investments are modified Ponzi schemes. If they don’t keep fresh money coming in, the whole thing collapses. Which works out for the first few who got in, or the first few to get out, or the few largest investors, but really screws over the majority of amateurs who go into investing because their investment broker/advisor told them it’s a good thing to do. Of COURSE they’ll say that – they need to keep the thing moving or it will fall.

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