Eh, If Canadians Are Doing It, Is It Good?!

And, what I am talking about is not having another Labatt’s brew. I recently read a post about many Canadian pension plans becoming more involved with investing with “non-traditional or alternative assets”….basically, any investment outside of stocks bonds and mutual funds. While I usually write my own posts, I am riding a bit of their wave as I have been waiting for more pension plans to actually acknowledge what they see as potential benefits associated with investing in such assets.

Why do these Canadian pension plans believe that investing in non-traditional assets is of value to them? For the same reasons that you do:

Their (and yours) inability to make any meaningful and needed returns based on the low international interest rates. Gosh, and you thought it was just you that couldn’t get any decent returns, right :)

In a study by RBC Investor Services, Ltd., pension plan administrators were concerned about their fiduciary responsibilities in meeting the long-term interests of their clients based on current paltry interest returns. A whopping 71% of the plans confirmed that they were very concerned over the low interest rates currently available (in a similar study done the previous year, 28% said they were concerned about low interest rates) and, as a result, nearly 50% (48% to be exact) of these pension plans were planning on increasing their investments into such alternative assets. By the way, last year as part of a similar study, only 21% indicated such an inclination or plan.

Did the study find reasons why smaller pension fund managers may not be as successful as larger funds with investments into non-traditional assets? Yes, the study showed that smaller-sized funds may not have the expertise to administer such assets within their plans but, as a general rule, that was not stopping them from making investments into alternative assets….which is why right now is a good time to stop with this post:

You see, whether you invest in alternative or non-traditional is your decision. As these pension plans have readily admitted, their strengths (historically) have not been in alternative assets, but they are more frequently making such types of investments. So, maybe you should make that consideration yourself. As an individual investor, you MAY have the knowledge and gumption believing that you can make a better return with your retirement funds than your broker. Are you right or wrong…only you can make that decision. But, isn’t it nice knowing that you can actually have one self-directed retirement account where you can invest in both traditional and non-traditional (e.g., alternative assets) assets all from one account, leaving you the freedom and flexibility to invest as you see fit.

This entry was posted in 401(k)'s & IRA's on by .

About John Park

John Park is a facilitator for self-directed IRAs and 401Ks and founder of PGI Agency, Inc. which is host to PGI SelfDirected. Prior to that, John maintained his own insurance agency and also worked in intercollegiate athletics (Arizona State University, Big Ten Conference Office). For over 6 years, PGI has established both self-directed IRA and 401K accounts so that individuals can take control of their retirement assets and invest in both Traditional and Non-Traditional (e.g., real estate) assets. John believes that most people should fully explore having FULL control of their retirement funds and be the steward of their own money.

2 thoughts on “Eh, If Canadians Are Doing It, Is It Good?!

  1. Joe White

    Interesting. I do believe our current system might be a better option. Many retirement plans (401k’s, ect), do allow monies to be borrowed, for investment.

    As a real estate agent, I’ve come across a few 1st time investors that had the best intentions, but really didn’t know their numbers and ended up with unfinished flip jobs or foreclosures.

    I’m not sure risking designated retirement money is wise. I think the ability to borrow/re-pay the monies from your retirement funds is asset alone.

    Just my two sense! Great article!

    Reply
  2. John

    Joe, I agree with you. The intent of this article was to show that a higher of percentage of Canadian pension plan administrators are investing (on behalf of plan participants) more into non-traditional investments (e.g., real estate). So, this post wasn’t even about individuals self-directing their own investments. Obviously, my job is to educate folks on what they can do, not just what they are told they can do (which is different that what IRS rules allow, of course). Thanks for your kind words and glad you found some benefit in the post. John

    Reply

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