>Why should retirement accounts get invested in anything but government bonds and index funds?
Step 1: Pension return rates get "set" during boom time highs.
Step 2: Boom times end, the pension fund is grossly under funded, and the manager needs to find ways to get excess return beyond what the typical fixed income and equity products can offer.
Step 3: Pension Managers reach for "alternative investments", hoping for higher returns that can offset lackluster market returns.
What if I told you the economy engages in boom/bust cycles and there was one oh right around the late 1990's that caused everyone to ratchet up pension benefits then wiped out a ton of retirement account value, setting the stage for dodgy investments being made in the 2000's trying to recover?
Step 1: Pension return rates get "set" during boom time highs.
Step 2: Boom times end, the pension fund is grossly under funded, and the manager needs to find ways to get excess return beyond what the typical fixed income and equity products can offer.
Step 3: Pension Managers reach for "alternative investments", hoping for higher returns that can offset lackluster market returns.