The following text may have been generated by Optical Character Recognition, with varying degrees of accuracy. Reader beware!

www.insideHALTON.com | OAKVILLE BEAVER | Thursday, April 11, 2013 | 24 What tools to use when assessing investment risk Dollars & T Sense oday we'll continue the discussion about investment risk. Our last column considered risk assessment surveys as one tool that can be used to assess the appropriate amount of risk that an invester should assume. We cautioned you many risk assessment surveys might be misleading and recommended you consider several aspects of the risk. Also important is the level of risk you take be adjusted as circumstances change. There are two primary problems with attempting to understand investment risk. First, the assumption that risk equals investment return is wrong. We have all heard the popular expression you have to take some risk in order to achieve investment gains. Some risk does lead to long-term gains. Investing in equities, for example, is riskier than interest bearing bonds but over time investers have been rewarded for taking that risk. Popular and typical forms of investment risk, such as speci c stock selection, market timing and manager selection, have not shown those risks are rewarded with additional investment returns. Sometimes speculation in these areas does work; however, that is random and more a case of good luck than good judgment. Ongoing academic research and investment in- Peter Watson Guest Contributor GET A DISCOUNT EQUAL TO DOUBLE YOUR HST tax relief $ dustry data continue to reveal normal speculative risks accepted by investers do not produce the desired superior investment returns. Any meaningful consideration of risk should be focused on real investment risk versus speculative risk, which does not necessarily equal higher returns. The second problem with risk is there are many forms of risk that have nothing to do with the actual risk of a particular investment. For example, if your main nancial objective is to prepare for retirement, your risk is not just investment risk but the risk of a reduced standard of living during retirement. To illustrate this we will assume an Oakville family is risk averse. They are disillusioned with the stock market because of the volatility and uncertainty in the markets for the last several years. They have decided to play it safe. They inform their nancial adviser about their decision and most of their assets are transferred to excellent quality, income producing, safe bonds. Sound good? Perhaps we should rethink that. Did they avoid stock market risk? Absolutely. Did they unknowingly, virtually guarantee their worst nightmare of not being prepared for retirement? Regrettably, yes. Risk has many forms and any risk conversation must be multi-dimensional. Our Oakville couple did not have enough assets or earning power to have the comfort of no equity risk. They needed a higher investment return to grow their assets suf ciently to allow them to accumulate enough wealth to sustain them during retirement. There are many other aspects of risk. A retired couple might want safety but their investments need growth to keep pace with in ation so their late retirement can be nanced. That is as simple as dividing the portfolio into two sections. The money that is needed during the short-term can be invested conservatively. Money that is needed for the long-term can be invested with more risk because the longer time frame for those assets allows them to accept normal short-term market variability. One way to facilitate the risk discussion is to look at the historic volatility of investment portfolios similar to your own portfolio. That will permit you to put investment risk and the normal ups and downs of the market into the proper perspective and allow those investment risks to be evaluated in the context of other risks, such as investing too conservatively and not having the chance to achieve long-term nancial objectives. -- Submitted by Peter Watson, MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner 117663 After DiSCount Save $413 Includes sofa, armless loveseat & corner chaise 3 Piece Sectional 6 Piece Living Room Includes 3 piece sectional, cocktail table and 2 end tables. $ 149476 $0000 After DiSCount SAve $525 Zoomer Fair equal to DOUBLE your HST! 53 PLUS discount FREE FINANCING FOR 12 MONTHS* $ 1805 9 Piece Dining Room Includes rectangular extension table and 8 side chairs. $ After DiSCount SAve $634 1035 97 King Storage Bed 5 Piece Bedroom Includes king storage bed, Includes headboard, footboard with storage dresser and mirror. $ 16 After DiSCount and rails. THURSDAY, APRIL 18th, 10 amyour - 2community pm mall Exhibits set-up throughout the mall for Zoomers, Boomers, Seniors and their Caregivers. Presented in partnership with the Mississauga branch of After DiSCount SAve $364 2168 Save $761 Mississauga 4561 Hurontario Street, Unit #2 South East Corner of Hwy #10 & Eglinton (905) 755-9030 · (877) 784-4404 Monday to Friday 10am to 9pm Saturday 10am to 6pm Sunday Noon to 5pm Stoney Creek 410 Lewis Road and the South Service Road Located in Stoney Creek Decor Centre next to Stoney Creek Furniture (905) 643-4646 · (866) 693-4646 Monday to Friday 10am to 9pm Saturday 10am to 5:30pm Sunday Noon to 5pm Woodbridge 7979 Weston Road Located North of Highway 7 (647) 427-3900 · (877) 341-9260 Monday to Friday 10am to 9pm Saturday 10am to 6pm Sunday Noon to 5pm *On approved credit. Processing fee $89.95 and minimum purchase of $1499 is required. A $21 annual membership fee may be charged to your Account subject to certain conditions. Financing provided by CitiFinancial Canada, Inc. and is subject to all the terms and conditions in your cardholder agreement and the credit promotional plan disclosure statement (collectively the "Account Agreement"). Finance Charges will not accrue on the purchase during the credit promotional period of 12 month if the required minimum payment is made each billing cycle during the credit promotional period when due. The purchase price is divided by the number of months in the credit promotional period to determine equal monthly payments to be made during the credit promotional period. The terms of the credit promotional plan will terminate if you default under your Account Agreement. On termination or expiry of the credit promotional plan (or for purchases that are not part of the credit promotional plan), the standard APR of 29.99% and the terms of the regular credit plan will apply to all outstanding balances owing. This offer is valid up to and including promotion end date, cannot be used for previous purchases and cannot be combined with any other offers, promotions or special incentive programs. Certain terms and conditions apply. See store and Account Agreement for further information. Previous purchases excluded. Cannot be combined with any other promotion or discount. Discount offers exclude Stearns & Foster®, Sealy, Serta & Ashley Sleep, floor models and clearance items, sales tax, furniture protection plans, warranty, delivery or service charge. We reserve the right to correct any such errors. A deposit equal to Sales Tax and delivery charges is required for all financed purchases and is not eligible for this credit promotion. HomeStores are independently owned and operated. ©2013 Ashley HomeStores, Ltd. Expires 04/22/2013 For a list of exhibitors, visit sheridancentre.ca and click on Zoomer Fair under Mall Events. your community mall sheridancentre.ca