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Demanding smartphones over `smart' investment hy are we so obsessed with having a smartphone when many of us have a notso-smart investment portfolio? The Canadian consumer is extremely demanding when selecting a smartphone. We now insist that in addition to being able to phone someone, we also need instant texting, e-mail and Internet access. Technology is advancing at a rapid pace and many of us must have the latest gadget that comes with all the bells and whistles. The BlackBerry offered by Research In Motion (RIM) dominated the market. Then it lost its coveted leadership position due to a decline in its rate of innovation. Apple launched the iPhone and for many it became the "must have" while the BlackBerry lost its lustre. The consumer voted with their pocketbook, preferring 19 · Thursday, March 29, 2012 OAKVILLE BEAVER · www.insideHALTON.com W to own a sleek looking iPhone that was simple to use. It is interesting to compare consumer behaviour within the smartphone market to the world of investing. Both markets are large and as you can imagine there are ongoing discoveries in both areas. Anytime you have billions and billions of dollars in a single market you can assume there will be a concentrated effort in the area of research and development. However, the rate at which the consumer will accept that new information is totally different. Smartphones keep on getting smarter. At the same time, however, investment portfolios continue to use old-fashioned, outdated and archaic methods. Investors ignore what is known about investing and as a result they take on more risk, generating poor investing results, paying too much tax and incurring higher investment fees. The irony is that much of the cellphone market is fashion -- they all do similar things. If you owned your least favourite cellphone, you would still have a great product. Your investment portfolio affects the most important aspects of your life. Those dollars will allow your family to have the lifestyle they desire. It will help pay the postsecondary education costs for your children and give you the opportunity to have a financially secure retirement. There are several known investing facts that are ignored by many. One -- the initial stage of building an investment portfolio -- is the breakdown between stocks and bonds. This is referred to as asset allocation. A major breakthrough in the understanding of asset allocation came in a 1980s Dollars & Sense By Peter Watson research project that is still widely referred to today. In excess of 93 per cent of the normal volatility of your investment portfolio can be attributed to asset allocation. This is the single largest factor in determining investment returns. Despite this knowledge, many investors randomly purchase investments instead of taking the time to design a portfolio that meets their long-term financial objectives and considers their investment risk level. Investment research also shows that there is no logic in trying to beat the market by trading securities and timing the market. Trading activity comes with brokerage commissions and can be very tax inefficient when done outside a registered account such as an RRSP. Some investors try to delegate the ongoing management of their assets to an actively trading professional manager -- this does not work either. Over the long term, those managers do not achieve returns above the market averages. The management fees and trading costs are high and erode your investment return. So we have a dilemma. There are proven facts about what works and what doesn't work with investing. Large institutional investors embrace the research and manage investments accordingly. Retail clients do not and as a result they have disappointing investment returns. Successful investing is a key element if you want to afford things in life that are important for you and your family. The objective of every investor should be to create a smart portfolio that utilizes known facts about investing. -- Submitted by Peter Watson, MBA, CFP, R.F.P., CIM, FCSI. We've set up a huge tent just outside the doors of our main building for our Biggest Clearance Event, EVER! Save thousands of dollars on Leather Sofas, Sectionals, Recliners, Case Goods. HIDE HOUSE PLUS We're clearing hundreds of Leather, Suede & Shearling Jackets and hundreds of Leather Pants & Accessories ACTON, ON 49 Eastern Ave 1-877-453-2843 MONDAY - SUNDAY 10-6 WWW.HIDEHOUSE.CA