Two Kinds of Monies: OOM

Showing posts with label OOM. Show all posts

Thursday, May 7, 2009

Mutual Funds are No Fun

Like most Canadians, I don’t work in the finance industry. (In fact, I work in the computer industry.) Again, like most Canadians, I don’t do my own investment; I give my RRSP money (RRSP is similar to the 401(k) plan in the U.S.) to an investment advisor.

My investment advisor is with Manulife Financial. Like most investment advisors, my Manulife advisor advised me to put my money into various mutual funds. And that was fine with me.

And I know that mutual funds charge money for providing their services, and that was fine with me. They charge a certain percentage of the value of your holdings as their management fees. They call this percentage MER, short for Management Expense Ratio.

The MERs the mutual funds charged me were about 2% to 2.25% (depending on which particular fund), which was a bit higher than usual, but that was still fine with me, as long as the money they made for me was greater than their MER money.

What began to be not so fine with me was when all this financial tsunami started last year. On November 19, 2008, TSX dropped about 345 points to close at 8490.56. The following day (November 20), TSX dropped further to 7724.76, losing 765.80 points.

During that period, most people (if not everyone) lost 40% to 50% of their holdings in investments with mutual funds. Yet mutual funds still charged the same MER money.

If you make money for me, and you take some money from the extra money you made for me, I have no problem with that. But if you lose my money, and still take some money from my original money (the principal), then I really have problem with that.

Yes, there are gains and losses in investments. But if you (as an investment professional) lose my money, you still have the guts to take my money from my pot? To me, that’s preposterous!

As in my blog title: "If we don’t take care of our own money, it will become other people’s money." So in February this year (2009), I decided to sell all my mutual funds and have everything in cash (or money market).

By liquidating my positions, I managed to avoid the new low in March 9 this year. On that day, TSX hit a new low of 7566.94, and Dow Jones also hit a new low of 6547.05.

As of writing, I am still in all-cash (money market) position.

Tuesday, May 5, 2009

Monies or Moneys

The first question you may ask when you look at my blog title is, “What are monies? Shouldn’t it be moneys?”

“Monies” and “moneys” are both the plural form of money in English. Their usage, however, is not exactly the same. “Monies” and “moneys” are interchangeable most the time, but not all the time.

Traditional English grammar books say that “money” is uncountable, therefore it does not have a plural form. However, as most linguists agree, languages are not static but are lively and ever-evolving.

Example 1:

“After my trip to Asia, I have three different kinds of moneys in my wallet.”
This sense of “moneys” means “currencies”.

Example 2:

“I have my own business. Three clients owe me sums of $100, $200 and $300. My bookkeeper records the three entries in the “monies due” column in my accounting books. The moneys due to my business are $600.”

In general, the usage of “moneys” is more general and casual. “Monies” is used more in an academic sense, as in traditional economics textbooks (modern economics textbooks may start using moneys). So, it seems to be more orthodox, or even authoritative in that sense to use “monies”.

Nowadays, “monies” is usually used more by professionals that require taking economics courses in their training, such as bankers, accountants, MBAs, etc.

In daily use, we use “moneys” more often than “monies”, probably because less people know (or care to know) the “proper” plural form of money is “monies”.

Sunday, May 3, 2009