by Jorge Herrera

Created on: November 06, 2009

I feel bad for your loss and if it is of any help you are not alone.

The first thing it comes to mind to deal with this issue is to understand why this event happened.

Without much chance to error that loss was caused by design, bad management and lack of ethic, self interest on the managers and pure greed.

Why design? There is self serving interest on the side of politicians, lobbied by bankers and financial influent mogul personalities, to direct those pension funds to be deposited in mutual funds, hedge funds and similar vehicles to be managed by well connected political influential individuals.

The first tip would be: get away from those speculative schemes that since Wall Street is showing some signs of revival, there is going to be growing pressure on repeating the process.

Tip number two: get back to basics; there is nothing wrong in following sound economic principles and look to earn a decent rate of return without exposing yourself to high risk.

Tip number three: Did you notice that you had absolute no control of the failing scheme your pension fund was in? Somebody else was entitled to play with your retirement!

Tip number four: Educate and learn what options you have at your disposal where you can control how aggressive or what kind of venture your retirement funds should be involved in?

After you consider those four points I want to share with you that the way the financial system in this country is set, it is biased towards banks, financial institutions and the government. It is absolutely essential for our economic wellbeing to understand how money and the system work.

We are life time consumers in constant need for money, so liquidity is essential to our success; I hope you have noticed that when we put money in the bank or in retirement vehicles, we have to follow rules that are not too easy to understand and there is wide and accepted use of small print. That is to put money in the list of rules, conditions and penalties to take the money out are way larger.

Why do I bring this comment? They (Government, and financial institutions) invented the rules of the financial system and forced us to play the game without allowing us to learn the rules, that is the reason we in general are doing so poorly managing our economic affairs.

In conclusion, it is very important to educate ourselves about sound economic principles, to apply those in our economy; we should learn the rules of the game so we can protect ourselves and we can also learn to use the strategies banks and financial institutions use to make money: arbitrage, velocity of money, volume of interest, simple and compound interest.

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