It was in the Spring of 1992 when I first started in the financial world as a part-time bank teller while in university. I loved everything about it, and I’ve been in finance ever since.
One of my most vivid memories was a poster on almost every window of the branch a year later, loudly proclaiming to passers-by how their Special Equity fund had returned an eye-popping 54% the previous year. Even though I wasn’t yet licensed for investments, it seemed like a pretty good return to me.
So did so many others.
Unfortunately, not only did the next year fail to deliver such high returns, the fund actually went down significantly.
As a newbie to the financial world, I learned a few things early on:
1) Risk and reward go hand in hand.
2) Misleading expectations. Announcing 54% returns was implying people had missed out, and should invest during the high to avoid missing a repeat performance.
3) There is a difference between investments and speculation. Investments are part of a well thought out financial plan, speculation is just hoping for high returns.
Don’t Fall For Smoke And Mirror Investing
So, imagine my chagrin when, over 30 years later, I saw a mutual fund advertised with a big 34.3% return. In small print above was written: “Since inception May 19 2023”, and below: “Performance as at March 31 2025” in equally small print.
Not only was history repeating itself, there were two GLARING issues I saw.
Any guesses? I’ll wait…(hint: look at the dates)
They were cherry picking their returns!
The year earlier was an unusual year – both the stock and bond markets had negative returns and by May 19 they hadn’t recovered much. So it was a pretty good bottom to start a new fund.
On April 2nd, 2025, the markets were subjected to “Liberation Day” with tariffs that knocked the markets down thousands of points in just a couple of days.
It’s not too hard to see why the number was being reported only until the end of March, even though their April numbers were available.
This risky mutual fund hasn’t even been out for two full years yet!
So, what should you take from this?
Whopping returns like 34% or 54% can grab your attention – they’re supposed to! But they rarely tell the full story. That’s why it’s critical to approach investing with a plan that’s built to last.
In my upcoming 2nd book “Retire-ish” (coming out this Fall!), I share how you can avoid being caught up in the hype and taking risk you don’t need.
Whopping returns like 34% or 54% can grab your attention – they’re supposed to!
But they rarely tell the full story.
Here’s a sneak peek of my 5-bucket strategy to connect your savings with your purpose:
1. Minimum Desired Lifestyle – you’ll always know where your next paycheque is coming from, regardless of the markets.
2. Control the Uncontrollable – if something should happen to you or your family, what do you want to do about it and how would you want to pay for it?
3. Discretionary Spending – this is your ‘wants’ versus your ‘needs’, and because you know where your next cheque is coming from you’ll go from being fearful of the markets to being opportunistic!
4. Lifestyle Assets – those assets which, while they don’t produce retirement income, are essential to enjoying your retirement.
5. Making Money Matter – strategies to disinherit the CRA, putting your family, friends and communities first.
No smoke and mirrors here, just a grounded approach that puts you first.
The headlines will always chase performance, but your future deserves more than hype.
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