By: PanzerGrenadier
The more I read about the potential losses suffered by Lehman Minibonds and related structured products investors, the more I realise the importance of asset allocation as you grow older and nearer to retirement age or age where you would want to stop working.
Many of these investors who were near retirement age were looking for safe havens for a decent 5% return but instead are staring at potential losses of up to 100%.
The Monetary Authority of Hong Kong had already referred 24 cases of possible mis-selling to the Securities and Futures Commission for investigation and Singapore’s Monetary Authority of Singapore has also launched formal inquiries into allegations of breaches of law, inadequate internal controls by financial institutions or poor sales practices by their representatives.
One of the issues that has triggered complaints was why retirees or pre-retirees were sold on such risky products? If you were informed that the investment
had a possibility of up to 100% losses in return for potential 5% returns, would you have invested?]
Probably not!
Asset Allocation for Retirement
Unlike investors
in their 20s and 40s who have a longer time horizon in recouping investment losses (either realised or unrealised), retirees or pre-retirees are near to the end of their economic lives. Some choose to retire why others would be retired by their organisations. It is tough for them to recoup such losses at their age without taking even more extraordinary risks. Read more...