Greed is part of human nature. That is why Confucius warned the old not to be greedy.
If the old had not heeded it, their wealth could have been destroyed in 2008. It is sad to see many of the elderly who invested in the so called mini bonds which had paid a higher interest than their local banks and lost their entire fortune on the collapse of Lehman Brothers. If we happen to lose our wealth during old age, it could be difficult for us to make back the money.
I recall the 1985/ 86 recession in Malaysia where several credit & leasing and finance companies collapsed. Investors and depositors, attracted by the high interests that these companies were paying, paid the price of their greed. They just wanted a few dollars more for their money.
But investors have short memories. They are already investing in investments which promise to pay a higher interest than bank deposits. They are investing in the mini bonds again because of the prevailing low interest regime across the world led by the US. They are borrowing to chase equities and real property prices higher. Both China and Japan have recently warned against the created bubbles.
The astute have seen what the US is trying to do with the low interest regime – inflating assets value (think realty) and lowering the US dollar value (think exports). This policy did not work that well for Japan during the 1990s; I wonder if they will work for the United States of America.
Meanwhile risk takers are currently using the US dollars for their carry trades instead of the Yen. I call them risk takers because Japanese housewives made loads of money using the Yen for their carry trades but got burned now and then when exchange rates turned against them.
Retirees should not take on too much risk with their retirement funds. Neither should they be tempted by a few dollars more. There are still many safe and sound investments around even if they pay a low interest. Take heart that global interest rates will be raised eventually.