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40 Oakville Beaver Weekend Sunday November 14, 1999 To reach this section call 845-3824 Fax:337-5567 Business Inflation a threat to investments ecently released figures reported the inflation rate, as indicated by the Consumer Price Index, jumped to 2.6% in September. Have the fears of deflation dis appeared and is inflation again a serious concern? If so, it could be the largest risk element in your investment portfolio. The increase in the inflation rate affects the "real rate of return" that you get on your investments. What this means is that the actual return on your investment is lower than you think after accounting for the loss in purchasing power due to a less valuable dollar. Inflation of 2.6% is not neces sarily alarming when compared to the inflation of the 1970's and 1980's (7.6% and 6.2% respec tively). Nonetheless, it is useful to examine this recent increase in inflation and review the implica tions to your financial situation. Let's start with a simple GIC investment that pays interest of 5%. To make the arithmetic easy, we will assume that you are taxed at the rate of 50%. The after-tax return, after con sidering the government's share, leaves you with a 2.5% return. If you consider that inflation has diminished the purchasing power of your money by the 2.6% rate, then you actually have a slight decline in your wealth at the end of the investment period. How could this be possible? W hen you invest, the obvious conclusion is that you should come out ahead of where you started. Unfortunately, this is not always the case. There is only one appropriate way to evaluate your investment success and that is after tax and inflation. In the "game" of invest- B D B a n k o ffe rs n e w s e r v ic e s to e n tre p re n e u rs The B u sin ess D evelopm en t B ank o f C anada (B D C ) has expanded its consulting services through its BDC C onsulting Group. The G roup gives en tre p re neurs access to a national net work of consultants w ho know what needs businesses have and can offer tim ely and specific solutions. "T oday's fast-grow ing busi nesses, such as those operating in the global econom y and those that continue to upgrade their technology, are generating new needs, not ju st for financing but also for m anagem ent co n su lt ing," said Tom G allant, vicepresident & A rea M anager. "The BDC C onsulting G roup offers com plete, affordable are careful ly-chosen solutions, particularly in the new critical areas o f growth, quality and export." The expertise and skills pro vided by consultants help small businesses assess their present _ situation and th e ir p otential. They help plan a strategy to out do the com petition, boost their productivity and take full advan tage o f new technologies and growth opportunities. Consulting Group resources then help entre preneurs to im plem ent the solu tions they need to achieve all their growth, quality and export objectives. E ntrepreneurs in terested in more inform ation on B D C 's busi ness solutions, can call toll-free 1-888-IN FO -B D C (1-888-4636232), check out the BDC w eb site at ww w .bdc.ca or contact the regional BDC in M ississauga. The Business Development Bank of Canada is a financial insti tution wholly-owned by the govern ment of Canada. R PETER WATSON Dollars & Sense ing, this is how you keep score. When you evaluate your cur rent investment strategy, there are several steps you need to consider. First, you need to determine what rate o f return on your investments do you need in order to reach your financial objectives? How much money do you have now and by how much does your money have to grow so that you can send your children to univer sity or retirement comfortably? Once these are established, you need to anticipate your tax rate and the future rate o f inflation. Now compare the return on your existing investm ents less taxes and inflation to what you need to meet your goals. If your current investments are not earning enough to meet your long-term goals, you will need to reconsider the type o f assets you have and invest in asset classes that are more resilient to inflation such as equities. The recent increase in the infla tion rate is a good opportunity to see if your investment portfolio is "inflation proof." After all, your financial success is not measured just by the amount of money that you have, but your purchasing power. Peter Watson, MBA, CFP, RFP is the president of Peter Watson Investments -- an Oakville firm spe cializing in retirement planning, RRSPs, and investment planning. He can be reached at 842-2100. Photo by Peter C. McCusker Dave Schmaltz o f Oakville Honda presents a $4,000 cheque to Cheryl Taylor of Halton Womens' Place at the recent Oakville Chamber of Commerce Business After Hours gathering. GRATEFUL GIFT: Business news updates.... Just recently, it was announced that York International Limited from Mississauga has selected Winston Business Park for its new facility. The company manufactures commercial air-conditioning equipment and will occupy about half of the new 150,000 square foot building being built by Gottardo at 2323 Winston Park Drive. Cooper Construction also announced that All Seasons Equipment and Amlite Lighting both of Mississauga have selected Winston Business Park for its new expanded facilities. Amlite, a leading manufacturer, importer and distributor of residential lighting fixtures, will occupy 55.000 square feet. All Seasons Equipment, a manufacturer of machinery and equipment used in the roofing business, will move in February to its 27.000 square foot building. Industry Canada Supports Oakville Economic Development It was recently announced that the Federal Government, through its Industry Canada Department, has approved a contribution of just over $40,000 toward Oakville's Economic Development program. These funds awarded under the Program for Export Market Development (PEMD) are targeted to assist Oakville with its plans to attract foreign industrial invest ment to the community. The financial contribution is being used for three projects: A CD-ROM (Continued on page 41) r B e st S e lle r, i An Oakville Beaver/Burlington Post classified ad reaches a quarter million readers. That's a lot of readers. O akville Beaver Burlington Post small ads. am . a & G J e d / C A L L 33 7 -0 1 0 ___________________________________________________________________________________________________ I