Any investors out there? If so, how does an 11.9 per cent annual return sound?
With interest rates at an historic low, and most equity markets declining in value in 2011, I’d take an 11.9 per cent return on my investments any day.
So just where were these miraculous returns achieved? In some high risk venture tied to diamond-mining in the Northwest Territories or gold mining in Zambia? No, according to an article by Financial Planner Jason Heath in the Vancouver Sun they were achieved by the Canada Pension Plan.
In its mania to force Canadians to become responsible for their own retirement security, the Harper government has whittled away at the existing CPP and Old Age Security framework, and bent over backwards to introduce new investment vehicles like Tax Free Savings Accounts and Pooled Registered Pension Plans to help thrifty Canadians everywhere take charge of their financial future.
So how was the CPP able to achieve such an outstanding rate of return? Here’s Heath’s take:
Was it stock picking? No. In fact, they employ a combination of passive and active investment selection, so the stock selection component of the returns is limited. Diversification? Yes, but some of that diversification is into assets that the average Canadian retail investor has trouble accessing, regardless of the critics who are sure to say otherwise. The fact is, Ma and Pa Canada don’t have exposure to the private equities, private debt, infrastructure or commercial real estate the CPP is able to add to your portfolio.
So it would seem that if the Harper government was really serious about helping Canadians prepare for retirement, as opposed to essentially privatizing this area of our financial well-being and handing it over to investment firms, banks, and insurance agencies, it should be increasing the CPP’s capacity not shrinking it.
Here’s how Heath put it at the end of the article: Low costs, high returns and no conflicts of interest. CPP expansion is something the average Canadian should get behind.