Best Financial Decision Ever

Whilst wandering through my massive archive of older articles, I tripped across Take the Money or Leave It? which I wrote about a month after I got laid off from Nortel.


Image courtesy of Stuart Miles at

In that article I mused the following interesting question (remember this was 2008 during the great crash):

The options I have are:

  1. Leave my money in my former (or soon to be) employer’s pension scheme and start drawing from it at either age 55 or later.
  2. Take the money out and put it into a Locked In Retirement Account (LIRA), or at least the portion that the government allows.

As background my current employers pension plan is under funded, by a fairly large amount. I also have passed a point, so that I can draw from the pension when I am 55.

Thanks to Mrs. C8j, Michael James and a little common sense on my part I ended up doing the second option and it was the best (read luckiest) decision I ever made due to the fact that:

  1. Nortel’s Pension plan was even more under funded than anyone knew and it has serious issues paying out these days. I kept hearing that the Ontario Government had “insurance” to back up the pension, but given the money I took out that “insurance” would not have covered the amount I should have been paid. I also kept hearing “there is no way the government would let Nortel and/or its pension fail”, I think we know what happened there as well.
  2. The money I received went into an LIRA in December 2008, when stock prices were the lowest, and it grew a great deal, until I took it out to buy into my current employer’s pension plan. Again, blind luck and no great “market timing” strategy on my part, simply me needing to buy when the market is lowest.

This shows that many financial decisions cannot be evaluated as being “Good” or “Bad” immediately, sometimes it takes a while to realize you did something well, or made a massive blunder.


Nortel : What is Left?

Most of my regular readers know that I am a survivor of the great Nortel debacle, and I have had a lot of folks ask me questions about whether I am one of the unlucky people (still) standing in line hoping to get money from the former Canadian Technology Demigod, and the easy answer is no (fortunately), I don’t think they owe me anything (but I am not positive, there may be payments for patent work).

I first wrote about leaving Nortel in On Being Laid Off, which was just a raw statement that I had been let go after 20 years working there, but I have mostly stayed away from the topic of Nortel. Given time has passed, let’s look back 6 years ago and I can expand on a few areas where I have had many questions about what happened to me in specific after I got laid off.


Nortel Once a Giant Now Deceased High Tech Firm

In my article Nortel Teeters, I hinted that things might not go well should Nortel declare bankruptcy in January, 2009, but I really had no sense of just how lucky (and prophetic) that I was with my statements. At the time, I still thought the Canadian government would not let Nortel go into full bankruptcy, there was too much on the line, but I was sadly mistaken.

On January 15, 2009, I saw how close a bullet I had dodged (more like a howitzer shell) and learned Sometimes it’s Better to be Lucky in life. To paraphrase what I wrote:

  1. I had already been paid all of my severance money before the bankruptcy declaration
  2. I had removed my funds from the Nortel pension plan (earlier than I had planned, again by blind luck)

So, in fact, I wasn’t just lucky, I was the same as  the Irishman who decided not to take the Titanic, and take an earlier  boat. How was I this fortunate ? Thanks go to Michael James, My Wife and a few other folks, as they made me act quickly enough and I am lucky I did, because anybody owed money by Nortel on January 15,2009 were out of luck. Who might these unfortunate folks have been (aside from the folks who loaned them money (bond holders), subcontractors and other real creditors)?

  • Anybody owed severance payments of any kind, have received next to nothing (if not nothing) since that date (that I am aware of)
  • Folks on their disability insurance program, as Nortel was self-insuring, thus those folks stopped getting payments as well
  • The Nortel Pension was owed a great deal of money, as it was in a short-fall before the bankruptcy, that never got paid back (that is one of the bigger arguments about remaining funds).

In the news lately (this being 2014) there are discussions going on about the remaining funds from the Nortel dissolution (mostly from the patents sales  and the like), and who will be getting funds from this pool of money? Bond holders will be getting some money, that is for sure, and some of the European pensioners will get some money, but who gets what of the remaining money remains in question , the money seems to be in the hands of two people now. Two bankruptcy judges one in the US and one in Toronto are now deciding what to do with the left over billions.

For me, I was lucky (the understatement of the century), I am owed nothing more (that I am aware) from Nortel, for those waiting for hopefully a few crumbs from the remnants, I wish them Bonne Chance, and hope for the best for them, and their families. At times I have had survivor’s remorse, in that I managed to get away in one piece, and I know of others that were not so lucky, but that is how life works, I suppose.



Why I’m Not Rich (the 90’s)

Glory Days (the 90’s)

As promised on Tuesday here are a few more of the reasons why I am not rich (financially), and the reasons (in my opinion) why I did not make it rich.

In the 90’s the perception is that the stock market and making money was as easy as sex allegedly was in the 60’s and 70’s, but I can assure you that this was not the case. I like to think of it like teenage sex, everybody talks about it, but (when I was young) there wasn’t any going on for me (I kept asking where do I get some, but no one thought that was funny).


Nortel Once a Giant Now Deceased High Tech Firm

Yes, there were opportunities that arose that I might have taken advantage of, if I didn’t have kids, a mortgage and a fairly paranoid view of how the stock market worked (and had a large pot of money I was willing to lose). I was in the Nortel Savings Plan, where for every $3 I deposited the company kicked in $1, but this was in stock and money could only be removed 2 years after the money was put in. I did actually make some good money on this in the early part of the 90’s, and it helped pay for a car and some repairs on my house, so my claims of abject poverty are really not based in fact. Yes, I made some money early on in the 90’s.

I did take a few flyers on a few stocks, but I became confident that I could bet on the loser in a one horse race after a few of these flyers crashed into the financial terra firma with a loud bang. A few of these were Carona Mining, and a few other mistakes.

My biggest slap on the back of the head recollection is when I was in the I.T. group at Nortel and I looked at these stacks of boxes from this company called Cisco. I went and talked to the Networking dweebs, and was told this was the manufacturer we were going to use to set up our corporate data network. At that time Cisco was not a name I even recognized, but I thought, boy I should really buy some stock in that company if we are using them, this was in 1990, and if I had bought some Cisco (and presumebly sold before 2000), I might be a lot farther ahead in my financial journey.

On the converse side of things, as I have written about before, in the Top 5 Investing Regrets of my Life I held onto high tech (specifically Nortel) shares for way too long (when I knew full well that most of the claims being made were at best fantasy). Another example of sometimes when to buy is not as important as when to sell. At the point I am commenting on, I had a substantial investment in Nortel in terms of:

  • Savings Plan stock which I had purchased with a kick in from Nortel of 25%
  • I was being paid by Nortel (including bonuses and such)
  • I had a pension with them (which was also buying Nortel Shares)
  • Stock options (which never were worth anything) to purchase Nortel Shares
  • I actually owned Nortel shares outside of the savings plan that I had bought myself (yes that was a huge mistake)

I could have made a lot of money here, I could have made some money, but at the end I lost a fair amount of money, which was my own fault. I was able to extricate my pension in tact, but the rest of the money was mostly written off, so I am luckier than a lot of folks.

Now I have a boring RRSP, Spousal RRSP, and a Public Service Pension, and I am quite happy.

Am I lamenting with these posts about how this is all unfair? No, not in the least, this was all of my own doing, and it has taught me a great deal about what is valuable in life, and how a lot of times bad things happen for a reason.


Long Term Disability Insurance

Another fine rant from me about how Nortel screwed over their employees who had “Long Term Disability”, because Nortel was self-insuring. No one came to their rescue either.

Nortel Keeps on Screwing

I have written previously about the plight of the folks who were in the Nortel Disability plan (and are now in a bad predicament), but they lost one of their most active advocates in Peter Burns over the weekend. Peter attempted to put a face to the folks effected by the Nortel Disability debacle (because Nortel was self-insured, the disability insurance pay outs became simply another group of creditors).

My connection to this story is that I paid into this fund, assuming I was protecting my family, when I worked at Nortel, but I was lucky that I never had to test it’s usefulness. I am also aware of a bunch of folks who are now in a much worse financial place because of the January deadline which cut off these folks from the benefits they thought they were purchasing.

Given there are a lot of folks who do worry about the future and attempt to protect their families with disability insurance, they need to find out how this disability insurance actually works. If it is with your employer and they self-insure, you can easily end up in the same predicament as the former Nortel employees.

The insurance looked like it was being run by SUN Life, but in fact they were simply administrators, and it was Nortel who was paying the bills (which was cheaper for Nortel at the time), but now with Nortel being a bankrupt husk of itself, now things are very different. The disability payments got thrown in with the hundreds of millions owed to vendors, customers and partners, and thus were not going to get paid much at all. As of January the pay outs have stopped and now these folks are living on whatever disability income they can get from the Government.

A good example of doing the right thing and still ending up in a bad place. Research who(m) you are insured with and make sure the insurance is going to be there when you might need it.


Following the Crowd is Safe?

Safety is Relative

So you think following the crowd is safe, because you are with others?

Ask a lemming if following the crowed is a good idea, better still ask a cow in line at the slaughterhouse, everyone else is going in this direction, it isn’t safe?

As you can tell I have been on a Risk management course and I am now full of pithy comments about risk and such, but seriously, just because everyone else is doing something, you must at least ask yourself if this is the right thing for you (especially when it comes to your money).

As I mentioned many folks who were badly singed in 2008 with stocks are looking for safer places to put their money so they think Putting Money in Bonds is Safe (or at least in Bond Mutual Funds, or Bond Indexes). Yes, normally bonds are safe(r), but there is a perfect storm right now that does not make them as safe as you think.

Everyone in the day thought Nortel was rock solid and safe, one misguided financial media maven Garth Turner was still sending misguided investors back into the killing fields of Nortel even as the stock imploded. I remember people saying, “If Nortel goes down, Canada is going to be in a bad way“, or “The Government won’t let that happen“, well it did, and again, the majority or the herd were wrong again here too.

The experts are saying commodities and Gold are a safe place to hide against wars and all the calamities of today, but I don’t understand these markets enough to feel safe in them, so I am staying out of them. Living in Canada I am effectively already feeling the benefits of commodities and gasoline, with our economy continuing to grow thanks to Oil and Commodities, maybe I should hedge some other ways to take this into consideration?

For a non-financial example look at the proliferation of tattoos in younger folks, is this the right decision? I have no idea, but my “not following the crowd” comment to my kids is, get into Dermatology, because in 20 years all those butterflies are going to be condors, and their owners are going to want to have them removed (oh and all those folks getting multiples piercings are going to want them filled in too).

The Herd is Right Sometimes

Most of the time, most of the people make mostly correct decisions, but that does not mean there should be a blind following on your part, especially when your money is involved. You must ask questions about why your money should be where it is, why it should go where folks think it should go, and don’t follow simply because everyone else is doing it.

Remember what your mother used to say, “If everyone jumped off the bridge would you follow them?”, kind of like what I did with Nortel.


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