Eight years ago I sold half an apartment to my former wife and found myself, for the first time, with a sum of money to invest. I did what conventional wisdom recommended at the time: stuck all the money into a mutual fund. I chose an “ethical” one, that doesn’t invest in the arms trade etc., but I don’t think that’s the reason that the whole move proved to be a financial mistake. (The fund in question has a good Morningstar rating.) My share in that fund has never to my knowledge even been worth what I originally paid for it, and the simple reason is that apparently I bought near the top of the curve.
Today I got an investment suggestion that seems exceedingly silly to me. When I bought that share in the mutual fund, I in effect paid a trained person to perform a task for me that I lack necessary skills for: to act as a middleman and invest my money wisely in stocks. Though this guy did an industry-standard job, I still lost money. Today, a Swedbank representative suggested that I move the money into his bank’s meta-fund. I don’t know the correct word for this in any language, but the idea was that I would pay trained middleman #1 to invest my money wisely in various mutual funds, meaning that he would select a trained middleman #2 and pay him to invest my money wisely in stocks. And somehow the combined skill of these two groups of people would give me a better result than if only one middleman separated me from my investment decisions.
Actually, Mr Swedbank didn’t say that it would give a better result, only that he hoped so. And when I explained that I couldn’t see how introducing an extra middleman would improve my chances, he had no reply to give. So my money, what little is left of it after the credit crunch, still languishes in that old mutual fund.
I should just have bought gold and buried it somewhere.