Wednesday, February 27, 2013

Expanding CPP

In this piece Corcoran is says that there is no risk free way to save for retirement. The piece is called "The New National Savings Fantasy" and it is about the CEO of CIBC called for enlargement of CPP plan.

Investing, no matter what you invest in is not risk free. It never has been never will be. Even putting your money under your mattress is not risk free. (Someone could steal it or it can lose its value to inflation.) This is because life is not risk free.

We live in large cities and control our environment to a big degree. However, we are not invincible and nowhere is completely safe. Every once in a while we hear from Mother Nature and we should absorb her message. We are not in total control of anything.

The civil service unions are called for the same, but their motives are different. They are hoping that CPP expansion would help solve the problem of their underfunded pension funds. This is not the way to go. Increasing the size of CPP is not the way to go. Maybe the biggest problem the CPP fund will have is that as a mammoth fund, it will not be able to make many moves without affecting the whole market.

Forcing people to save for retirement is not a bad idea. I just think that the market would be better if there are many players, not one huge mammoth CPP fund.

The other problem with one huge mammoth CPP fund is the potential for politicians to miss use the money. They can invest the money for political reasons or fritter it away. It is a very big temptation. It is better than we do not have a mammoth CPP fund to tempt anyone.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my site for an index to these blog entries and for stocks followed. Follow me on Twitter.

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