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A What the Canadian sale of negative-yield bonds means for investors without rst asking the important question: Why are they higher? The higher the interest rate, the riskier the investment. Interest rates are high if the quality of the xed income investments is low. Guest Contributor In the new world order of low and negative-yield xed income investments, if it looks too good to be true, it likely is. I anticipate a lot of promotion towards purchasing xed income investments that have apparently high investment returns. 15 | Thursday, August 4, 2016 | OAKVILLE BEAVER | www.insideHALTON.com major Canadian bank sold an investment that guarantees investors will lose money. That might seem absurd but hold on for a second, it gets more interesting. The bank had investors lining up and could not meet the demand. The Canadian Imperial Bank of Commerce raised almost $1.8 billion by selling bonds that yield minus 0.009 per cent. They are the rst Canadian bank to offer negative-yield bonds. Meaning those who bought the bond when it was rst offered, and hold it to maturity (six years), will have less money than they started with. The bond issue was oversubscribed and CIBC could have sold twice as many bonds as were offered. The obvious question is why would investors buy an investment that loses money? The answer: Capital preservation. The bonds are safe and during times of uncertainty, investors are looking for additional security. A slightly negative yield is more attractive than other options, some with the potential of big losses. This is the new normal and has serious implications for investors. Many investors, particularly during retirement, rely on interest-rate returns to pay the bills. Decreasing interest rates over the last many years has made it dif cult for retirees and others who relied on interest income. The prospect of negative returns for holding xed income investments makes it even more dif cult to generate interest income. The lack of fair interest-rate return on bonds, and other xed income investments, may lead some investors to look for xed income investments that have high returns Dollars & Sense Peter Watson Please do not be fooled by stronger than expected investment returns. Taking excess risk with xed income products just to chase returns that might not be there, can be dangerous. Buyer beware, because high returns equal high risk. Investing is like life, there are choices. I recommend determining the amount of investment income you need. Then determine the best ways to earn that income that are consistent with your investment objectives and the amount of a risk you are willing to accept. We are in a period of low or negative interest rates and it is important to ensure this is accounted for with your investment planning. -- Submitted by Peter Watson of Peter Watson Investments and Aligned Capital Partners Inc., MBA, CFP , R.F .P ., CIM, FCSI., Certied Financial Planner As a Maid Right owner you have my quality guarantee with every clean. FREE Save $25 off your Schedule 3 cleans, 1st regular service clean $ and 50 off your 4th get the 4th free* SM SPECIAL $ * 75 Off CLEAN *Receive the 4th of four cleans at no charge up to $125 Not valid on prior services. *Not valid value. on prior services. Not redeemable for redeemable cash. Applies to cash. new customers only. Not for Applies to new customers only. SPRING CLEANING Summer Cleaning SPECIAL OFFER: 289.809.9823 (XXX) XXX-XXXX localurladdressgoeshere.com Oakville.MaidRight.com Same Reliable Owners Clean Every Visit Eco-Friendly Cleaning Products Colour-Coded Cloths Reduce Cross Contamination EnviroShield® Whole Home Disinfecting Strongest Guarantee In the Industry ©2015 Maid Right Franchising LLC. Maid Right and JAN-PRO International are subsidiaries of Premium Franchise Brands LLC. WIN A $250 Gift Card to your favourite Dorval Crossing Store! Enter at www.dorvalcrossing.com Contest Ends August 31st, 2016 Over 60 Shops & Services located at the QEW & Dorval Drive Visit dorvalcrossing.com for more information