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T The role of wealth management Dollars & Sense Peter Watson 23 | Thursday, June 12, 2014 | OAKVILLE BEAVER | www.insideHALTON.com he role of wealth management is to provide a road map to a client's nancial success. That road is constructed with the aid of decades of research from two opposing camps: investment theory and behavioural nance. Successful navigation means using what has been learned from both bodies of research. Investment theory is about what works and how you should invest. This is referred to as modern portfolio theory and ef cient-market hypothesis. Consider this to be a practical hands-on guide to the types of investment strategies useful in your personal investing efforts. Knowledge is essential when constructing an investment portfolio. Start by determining your target return. This is based on the arithmetic of investing. How much money do you have to invest, will you be able to save and add to your investments? If you have a nancial goal to accumulate a speci c amount of money by a certain time, that is a combination of how much you invest and the return needed for you to reach that goal. The return on investment is your target return. The idea is to achieve this target with as little risk as possible. That leads to the decision on how to allocate your investment dollars between stocks and bonds. Stocks are more risky than bonds but over a long period of time will likely provide better returns. Bonds are used to lessen volatility and most likely have lower returns. It is the weighting of the number of stocks and bonds that is the single most important factor in determining the investment return. The ef cient-market hypothesis says the value of stocks, as determined by the market, is the correct way to value a stock. Thinking you can outsmart the market by selecting speci c stocks because they are undervalued is not GET UNPRECEDENTED ACCESS MICHAEL LEE-CHIN PRESENTS ACCESS 2014 SPEAKER SERIES Guest Contributor supported by academic investment research or market performance history. The preferred way to invest is to own a broadly diversi ed collection of stocks -- this should be done at as low a cost as possible. All of this is the rational side of investing, which can hit a speed bump called behavioural nance where human emotional swings replace any foundation of investment logic. The theory about how to invest can easily disappear. Human nature can hurt investment performance. Shortterm reactionary decisions are made when long-term discipline is needed. After a logical and sound nancial plan is developed, it is only a matter of time before short-term emotional decisions based on stock market swings motivate us to ignore the original longterm approach. That is reality and it happens all the time. Wealth managers can help clients articulate and de ne their nancial objectives. What is important in their lives? How much money is needed to be able to achieve their objectives? Then, the wealth manager's role is to bridge the gap between the theories on how best to invest and then help clients understand the reality of how emotional investing decisions have led to historically poor investing results. Consider a wealth manager as a nancial coach. They can use all of their investment and behavioural, personal skills to help you reach your goal. -- Submitted by Peter Watson, MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner JUNE 19, 2014 You are cordially invited to attend the third in a series of exclusive presentations. Hosted by Executive Chairman of Portland Holdings Inc. and Chairman of Mandeville Holdings Inc. MICHAEL LEE-CHIN FOR SEATING, PLEASE RSVP WWW.POWEROFACCESS.COM 1-888-990-9155 Seating is limited. We anticipate a large response from our community. PLEASE JOIN US THE PORTLAND HOLDINGS AUDITORIUM 1375 Kerns Road, Suite 100, Burlington, Ontario L7P 4V7 Doors open at 6:30 PM Presentation will start at 7:00 PM This session will feature Mr. Lee-Chin who will speak on "LEVERAGE: THE GOOD, THE BAD AND THE UGLY ...A CLINICAL REVIEW" The third in a series of exclusive presentations featuring unique investment opportunities. Brought to you by Mandeville Holdings Inc. REBATES ARE BACK! ACT NOW!! UP TO RECEIVE $ IN REBATES 2800 $1450 FACTORY REBATE UP TO + UNION GAS REBATE $700 UP TO $ CALL NOW, QUANTITIES ARE LIMITED! THE FORECAST CALLS FOR Was Per month 58 NOW ONLY Was $ AIR CONDITIONING & FURNACE DIAGNOSTIC SERVICE 29 ONLY + $650 OPA REBATE UP TO * Per month OAC $99 $ 49 Commissions, trailing commissions, management fees and expenses may be associated with investments. Products are not guaranteed, their values change frequently and past performance may not be repeated. The Private and Alternative Products being discussed are not publicly offered. They are only available under offering memorandum and other exemptions to investors who meet certain minimum purchase amounts or eligibility requirements such as "accredited investors". Information herein pertaining to the Private and Alternative Products is solely for the purpose of providing information and is not to be construed as a public offering in any jurisdiction of Canada. The offering of Units of the Private and Alternative Products is made pursuant to an Offering Memorandum and the information contained herein is a summary only and is qualified by the more detailed information in the Offering Memorandum. Please read the offering documents before investing. Mandeville Holdings is a registered trademark and Mandeville and its logo is a trademark of Portland Holdings Inc. used under license by Mandeville Holdings Inc., 1375 Kerns Road, Suite 100, Burlington, Ontario L7P 4V7 TEL: 1-888-990-9155 FAX 1-905-331-4245 HEATING & COOLING www.aireone.com · 1-888-827-2665 905-849-4998 905-632-0505 9 Locations To Serve You Better! A+ RATING *See dealer for details WWW.MANDEVILLEINC.COM