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

S uccessful investing has many components. Each plays an important role contributing to your nancial success. Taking a holistic view of all variables is the preferred approach. We will cover this topic in two segments. Today's article will review what should be considered when determining your portfolio's asset allocation. Next week, I will cover the various factors affecting your ultimate speci c investment return. Research proves the most important investment decision you make is asset allocation, so this is a good starting point. Get that right and you are well on your way to success. Any signi cant mistake in determining asset allocation makes it virtually impossible for you to achieve your desired investment outcome. We strongly recommend you do not make any investment decisions until you have a written Investment Policy Statement clearly stating how investments should be allocated. It is not possible to have an intelligent investment strategy before an investment portfolio's construction is clearly de ned. This is within your control and to not have an Investment Policy Statement in our opinion is a serious mistake. Asset allocation requires the decision to own stocks or bonds and determine the country or region from which these should originate. The two considerations for choosing an asset allocation are risk and return. How much risk are you comfortable taking and how much risk do you need to take to achieve the target Successful investing requires doing your homework beforehand period, bonds will deliver a lesser return than equities. Fixed income or the bond investments will have a return based on two factors: term and credit rating of the bonds owned. Term refers to the time when a bond matures and when you will receive your money back. Bonds with a lower credit rating are more risky. Those investments will need to offer a higher return to encourage investors to Guest Contributor take that risk versus investing in a safer, more conservative bond. return on your investment? Taking risk will or There is still a lot of guessing on how to inshould lead to a higher return. vest and the nancial sector does a poor job at Equities are stocks or shares of individual advising investors about risk and return. Many companies. In the short-term, they may be risky. Stocks can change in value every trading day. During periods of stock market declines, Join the value of stocks can and do decrease in value. Over time, stocks as a category do well, but there is always a time when they do not perform well. The variables that affect your equity investment return are the size of a company, its relative price de ned as a stock being either a growth or value stock, and nally pro tability. Ultimately, these three factors will in uence your returns, whether you use this knowledge pro-actively or not. Bar & Fixed income investments such as governChain Oil ment or corporate bonds is the category that 3.78 Litre complements equities. Bonds are more consisCurrent Power Machinery Inc. tent and, therefore, less risky. This can be an 1661 Lakeshore Rd. W. Mississauga attractive investment; however, over a longer 17 | Thursday, August 14, 2014 | OAKVILLE BEAVER | www.insideHALTON.com Dollars & Sense Peter Watson decades of theoretical research clearly outline the dimensions of successful investing. Ignoring that research and decades of investment results shows disregard for what is known in favour of ction. Asset allocation is your most important decision to make. Your investment success will depend on those decisions. Our recommendation is that you ensure you have carefully considered your portfolio's asset allocation and that you make use of the available information to guide you to better investment returns. -- Submitted by Peter Watson, MBA, CFP , R.F .P ., CIM, FCSI., Certi ed Financial Planner us today! www.echo.ca Stock up TODA Y! 905-822-4211 www.currentpowerinc.ca See store for details FREE burgers, hot dogs & cake for our valued customers Saturday August 23rd from 11:00 am to 3:00 pm It's our Birthday Bash! We Are Celebrating 22 Fantastic Years In Oakville Starting Friday, August 15th to Sunday, August 24th *Closed Mondays One Week Only! Birthday Wine Sale $ 50.00 OFF Prepared by you on site. just west of Dorval 481 North Service Road W. 905-825-2337 Some conditions apply, see store for details. Coupon expires August 24, 2014. Limit 4 batches per customer. Ein Stein Wine House 481 North Service Rd. # 3rd Line Purchase one batch of wine at regular price and receive the second batch at Take advantage of this once a year sale to have your aged wine ready for Thanksgiving and Christmas! EIN STEIN 4th Line Dorval North Service Rd. 481 Q.E.W. Hours: MoN. closed. tues.-tHur. 12-8, frI. 12-5 sat. 9-5, suN. 11-3 905.825.2337