Causes of the Global Credit Crunch

It is too early to fully understand how it could happen that the World's Financial System got close to a global meltdown during the past 12 months. Some blame greedy bankers, others lay the blame squarely at the foot of the (US) consumers. Institutional Investors also appear entangled as they allowed managements too much leeway and even egged them on to pursue ever-more risky expansion plans. However, we tend to think that regulators - and their paymasters the politicians - may have to take a large part of the blame.
Unfortunately they are the party that is the least likely to bear the full cost of their mistakes. Shareholders have to suffer from dramatically shrunken share prices, scores of bankers have lost their jobs, or are about to in the near future. Bureaucrats are happily engaged in the blame game and are joined by academics and media people who often are also less than objective in their judgement.

Life-Cycle Funds - no Autopilot to Success

These funds allocate their assets to a mix of underlying funds based on some parameters like the age or risk tolerance of an investor.
In recent years they have become increasingly popular with pension fund investors that are enrolled in defined contribution pension schemes and want to avoid having to make their own investment decisions on a regular basis.
Lifecycle funds - or their underlying investment rationale - can be of interest to the substantial independent investor as well as any financial plan should always take the age of the investor into account.
PBA helps you to look behind the label of the product. Not all lifecycle funds are the same as their allocation to various asset classes can vary substantially from provider to provider. The allocation may at times be totally unsuitable to the needs of the investor.

The End of Inflation?

A number of economists have been deceived by the seemingly low rates of inflation that many countries have experienced during the past 10-15 years. But the hard fact is that thanks to the power of compound interest even a low annual rate inexorably builds up to a staggering loss of purchasing power over a longer time span. The US US Consumer Price Index for example has doubled during the past 23 years and the Dollar lost half its purchasing power as a consequence. And this does not take into account the fact that the data has been heavily massaged down for political reasons. The power of compound interest is such that even a low rate of inflation erodes the purchasing power of money at a frightening rate."