 Good day, fellow investors. A customer from Canada asked me to help her with her pension fund investment strategy. Unfortunately, the options there are very limited, but I thought I'll dig in because I think it will give a lot of value to a lot of viewers. So let's dig into the pension fund investing strategy for those who have a pension fund to invest in. The list of options is very limited. We have cash and cash equivalent funds, fixed income, Canadian equity, US equity, true, free funds, BG, Fidelity, TDAM, international equity, foreign global equity, and then balanced funds with fixed bonds and stocks, depending also on the target date funds. So these options are really limited, but you have to do what you can with what you have. In order to help with the extremely important pension investing strategy, I did some research and the more research I did, the more I got pissed, pissed, outrageously mad. Let me show you what I found. Let's first take a look at this money fund. Sunlife, money market fund, so cash investments that should be very, very low fee. But the management fee here is 1%. The management expense ratio is 0.56% but I didn't dig how they calculate. Both the 0.56% and 1% is extremely high for a fund that has a cash position of 82% and invest mostly in short-term treasury bills. That's crazy high fees with the yields that are around 1.5 now that were extremely lower in the past before interest rates started rising. A year ago they would take everything, all your gains in fees and now it is a little bit less so you still get what 0.4, 0.5% of a yield. Okay, it is something but the fee that they charge is outrageous. Just the money cash fee, so if you have it in a bank, there is no fee. If you have it in a cash fund like this that has only cash, there is a fee of 1%. That's outrageous and if you are a Canadian pension fund investor, if you have a pension fund in Canada this needs government intervention immediately. So call Justin and tell him to lower the fees of your pension funds because your pension, your pension, your retirement, your financial well-being is going to the pension fund managers, not to you because of their huge fees. Perhaps for me I think the best strategy, life strategy would be for me to become a pension fund manager in Canada. The fees are outrageous and I can just live off even on a small portfolio that I manage. Let's dig deeper. Another fund that I checked is the Fidelity True North Fund. Fidelity famous for extremely low costs. Then I check here the management expense ratio 2.25%. Fidelity is famous for charging fees of 0.04% in the US on an index funds here in Canada for their true north customers. So they charge 2.25%. Similarly the SunLife Milestone 2040 target fund that has an allocation of 70% in bonds and a little bit in global equity has a management expense ratio of 2.28%. So a fund that invests 80% in fixed income has a fee of 2.23%. That's outrageous. So if you don't want to be 70 and waiting tables somewhere at the Vancouver Island, then you should do something about this. So again the second step is call your prime minister and make him do something about those fees. Just an example of what this leads to is I expect long-term average returns from stocks and bonds given the current interest rate environment will be around 4%. So here I have set a portfolio where I invest $3,000 per year for 30 years for my pension fund and the return is 4% per year. Without a fee the return is 174,000. So I invest 3,000 per year for 30 years, thus 90,000 and my return is then 174,000. With a 2% fee that those gentlemen from Canada charge for nothing mostly, the return is 123,000. So 30% of your pension goes to fees. If the fee is a more normal fee like I see in the United States of 0.2%, then the difference is just 5,000, 174,000 in comparison to 169,000. So the gentleman managing your pension fund will get 30% of your pension. 40% of your pension is a big difference is a difference between visiting your grandchildren or rotting in some cheap hospital somewhere in the middle of nowhere. So be sure if you can to share this and really send a message something has to be done here. However, if we can't do anything as it usually is with those political positions, political monopolies, where those with power take advantage of those who haven't power, we have to see what's the smartest strategy to invest. So let's dig into that unfortunately. Now if I invest in an index fund like the TSX Composite Index Fund, I always look at the CAPE ratio, the Psychically Adjusted Price Earnings ratio that tells me what are the average earnings over the last 10 years. And the CAPE ratio for the Canada Composite Index is 24.21. A look at historical returns based on starting CAPE ratios from 1926 to 2012 shows that the expected average 10-year return from the current CAPE will be between 0 and 1%, so almost negative. So I don't expect much from stocks now. Unlikely historically, anything can happen. However, those managers, they charge you a fee whether they perform or not. That doesn't matter for them. You are constantly putting your money in your pension fund and they are constantly taking the 2.5% fees. So I'm thinking, okay stocks are very expensive, I have to put my money for tax benefits for whatever the employer benefits they put in the money. So what I can do, I can differentiate between my pension fund and my other investments. I say, okay, now stocks are very expensive. I will keep cash in my pension fund because there is the lowest fee and I get some yield, small below inflation, terrible high fee, but I get some yield and I can keep my cash position in my pension fund. I have to set up a secondary portfolio where I invest, where I take responsibility for my retirement and there I invest in real estate, stocks, businesses, whatever, and here I try to really invest smartly by looking for higher yields and lower risks. So you have to learn about investing and balance that out. When stocks get cheaper, then you take more and more cash from your pension fund and invest it in those funds. A 2% fee is still high, but if the return is 8%, it looks a little bit better. In the meantime, you balance with other investments. So that would be my strategy in this case. Further, if you invest now in stocks, apart from the extremely high valuations, the SAP TSEX composite index is extremely badly diversified. The constituents' top holdings are Royal Bank of Canada, Toronto Dominion Bank, and Bank of Nova Scotia. And then you have Bank of Montreal and then you have the Canada Imperial Bank. So mostly focused on financials, then energy, and those stocks really depend on the economy. So your pension fund depends on the economy, your job depends on the economy, the government depends on the economy, everything depends on the economy. So most then investors in Canada that simply invest in their pension fund, well diversified they think, they own banks, they own their home, they own bonds, Canadian bonds if they hold the cash. So all those things are very, very inter-color related. If real estate goes down, your home, your mortgage, your job, if there is a recession, the bonds, everything crashes. So I really think people should create a separate portfolio that's diversified from what everybody has here. Still do it, but create more, I know you have to put aside more and more thinking, but I think it will be a great benefit in the long term. So to conclude first, call Justin, get to him, send him emails, hands, send him everything. Those fees, those monopolies have to be lowered. 0.2% fee is the maximum you should pay on your pension fund with the opportunities to invest where you want. Today we have so many opportunities, low-cost index funds that you can really make a well-diversified, low-cost portfolio that will be an average 0.2, 0.3%. Everything else is robbery, stealing, outrageous. The second strategy really apply common sense, think for yourself and see, okay, will this lead me to my retirement financial goals, the 4% minus 2.5% fee? If you see that it won't lead you, start diversifying, start looking for other investments, start building your own wealth and there is no other thing than taking responsibility for your finances. Don't put your financial life into the hands of the government. Did you ever see it succeed? I didn't, so really I wouldn't trust that. Diversify, create a life for yourself. Unfortunately I can't do more, that is what I would do, keep the cash there and then balance accordingly. If you still want to be exposed long there, then you can always have, I don't know, now that stocks are expensive, 50% in cash, 50% in stocks, or 50% in bonds, 50% stocks and then depending on what is the yield rebalance accordingly. Unfortunately they will take 1-2% of your retirement funds no matter what in the form of fees. Thank you for watching, looking forward to your comments and I'll see you in the next video.