Ok ok, I know it is referred to as Black Monday when the New York Stock Exchange went into meltdown but for those of us in Australia, it was the Tuesday when the carnage began following the lead from Wall Street. Not that I would really know because as an eighteen year old, I wasn't yet invested in any sharemarkets.
I had bought into my first mutual fund in May 1989 and purchased my first shares in 1990; so whilst the memory of the 1987 stockmarket crash was still very raw for many, I was just beginning my journey in independent investment.
I look back at the projections from my mutual fund where a twenty year old making a twenty dollar a week contribution would at retirement have between $1.5 million to $2.9 million in this investment account depending on earnings. I finally cashed out of this fund at age fourty eight with only $55,000 in total.
I never believed these projections, so despite the dire warnings to stay away from the sharemarket after the 1987 stockmarket crash, I wanted to become an investor. I thought I could do better but decided to run dual accounts just in case I messed up and lost all my money; at least I had a back-up plan to support my retirement.
I would never had guessed that this particular fund would be such a poor performer and I, a novice out-performed the fund managers. I may not have out-performed professional fund managers in terms of gross returns, but in the case of net returns with their fees deducted, I find I am way closer that I should be. No correct that - I am way out in front.
So I find myself in the precarious position, I joined this mutual fund and I contributed equal to $20 per week for twenty eight years indexed to inflation so my actual contributions were much higher. Plus I put a couple of lump sum payments in and looking at the actual investment returns, despite their assurances.
I pretty much pulled out my contributions with out any real earnings - that all went to the fund managers. They also charged me a percentage of the fund to pull my funds out before age sixty as I signed a fourty year contract.
So how does this relate to the 1987 stockmarket crash? This is my worst investment ever and was pretty much born from the fear of the stockmarket crash and how I could be left with nothing in retirement.
With twelve years to run, I would not have had enough to fund more than a single year of retirement at $60,000 - even the full pension pays $23,250 annually that leaves the majority of pensioners living below the poverty line.
Although I wanted to invest directly myself, the aftermath of the 1987 stockmarket crash caused me to rethink investing and be more conservative. If only I had backed myself in and just invested in assets directly, I would have been so much better off - I only have myself to blame.
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