Thirty eight years ago, in 1973, I was conned into buying a Life Insurance Policy. I was young and green and a sharp salesman signed me up to pay £10 a month. As I write I am looking at the 'Investment Plan Proposal' which I was shown at the time. It promised to turn my contributions (which came to £3,876.00 over the period of the policy) into £38,130. 00. So how's it done? Well on paper not badly. The letter I received from Friends Provident the other day told me that the projected maturity value was £33,582.70. But it has only done well 'on paper' because of course there is the little matter of inflation to consider. Sadly £33,582.70 in 2011 pounds is actually only the equivalent of around £2,000 of the 1973 variety such are the ravages of inflation.
In other words my investment has been a pretty much waste of time. Why has my nest egg not done better? Well at a guess it is partly because of costs incurred and partly because of cretinous investment decisions by those paid shed loads not to make them. Incidentally the great and the good who squeal for the imposition of a so called Tobin Tax on all financial transactions, don't seem to understand that the transactions which bankers do are not done with 'bankers money,' because strangely they don't have much of their own, but with the money which belongs to millions of small savers like me. In other words if there was to be such a tax yet another layer of costs would be added and our returns on our investments would be even more miserly than they are already.