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T Risk-adjusted return is key to investing Dollars & Sense Peter Watson Guest Contributor oday's column is about an imaginary Oakville couple in their 50s who want to start planning for retirement. Now that the children are off to university it is time to focus on their golden years. They interview three investment advisers who outline their investment strategy. The investment return projections range from low, medium to high; ve, seven and nine per cent per year. Which adviser should they choose? If this was you, who would you pick? We will assume all factors are equal, you like them all, you are con dent in their abilities and you could see yourself working with any one of them. The temptation is to choose the adviser who presented the highest projected investment return of nine per cent. It may seem logical but from an investing perspective it may be the wrong choice. The theory and practice of investing is not to maximize investment returns but to minimize investment risk. Once risk is minimized, then within that context you want to maximize the return but only with that same level of risk. Why take risk that you do not need? The industry term for this is a risk-adjusted return. The key is the subtle blending of the desired return within the risk level with which you are comfortable. Try to get the best return with the least amount of risk. the desired amount of money. With suf cient assets and less spending you can ac- see Managing on p.18 r u o v a S the t he SHADE EST. 1966 13 | Thursday, March 28, 2013 | OAKVILLE BEAVER | www.insideHALTON.com WITH A QUALITY AWNING OR PATIO ROOF SYSTEM Investment portfolios should be designed to achieve a speci c target return. This requires some planning and a little number crunching. The planning is a collection of all the important variables such as how much money you have, how many years until retirement and how much can you save every year while you continue to work. Looking forward, you will estimate your spending needs in retirement and then determine from where that money will come. Funds will ow from government bene ts such as the Canada Pension Plan and Old Age Security. Perhaps you are fortunate to have a pension from your employer. The balance will come from savings. Working backwards you determine how much money you will need at your retirement age to provide the necessary annual cash ow. A part of that process is determining the target investment return you need to achieve AWNING PRODUCTS www.jansawningpoducts.com SHOWROOM 4361 Harvester Road, Burlington 905 335 3733 Uncompromised Quality Since 1966 You Donate. Someone Works. Here's how... 1 You donate to Goodwill. now for Register FREE 2 3 The revenues help fund job training and other services to prepare people for job success. Goodwill sells your donations in our stores. $129 for a 2-hour science party at Safari Science ($299 value) 57off % ACTIVE WagJag 4 People find good jobs. CONVENIENT GOODWILL LOCATIONS Burlington Oakville Milton 4051 New St. 407A Speers Rd. 550 Ontario St. S (at Walkers Line) (west of Dorval) (at Hwy 25 & Derry Rd) 905-333-8989 905-338-6240 905-875-3533 Every42 38seconds seconds Every Goodwill connects connects Goodwill someonewith with a someone a job job ACTIVE WagJag 51% off 83% off Brought to you by $65 for 18 holes for 2 including cart at Deerfield Golf Club ($132 value) 48% off 61% off $159.90 for the IceOtherm pain relief medical device from Saringer Life Science Technologies Inc. ($310.25 value) ACTIVE WagJag $25 for fertilizer and rich soil conditioner treatment and more from Dr. Green ($149 value) Other options available ACTIVE WagJag Not all organizations that collect donations make the best use of them. Some thrift stores solicit donations under the name of a charity but as little as 5 percent of the money generated from these donations may actually go to the charity. At Goodwill, 84 percent of our revenues are funneled directly back into our employment and training programs. Goodwill is consistently ranked among top charities that make your donation go further. Donate Wisely $59 for 3 one-on-one professional sessions from Advance Hockey Academy ($150 value) Other options HAVE QUESTIONS? CALL 1-855-4WAGJAG