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Riskier k stock k environment is an investor's f friend: d Watson 11 · Thursday, January 12, 2012 OAKVILLE BEAVER · www.insideHALTON.com I f individual investors were at risk, the normal laws of investing would change as a result of the European sovereign debt bailout. European bailouts were the major investment news stories of 2011 -- with Greece receiving the most attention as it was effectively bankrupt. Austerity measures were needed in the country and the citizens rioted in the streets against the government's attempts to cut services and raise taxes. The focus then shifted to Italy, which was the most indebted country in Europe and the third most indebted in the world. Suddenly, a new wave of panic spread throughout Europe and around the globe. Bailouts, however, are not new. In 2009, the U.S. and Canadian governments rescued General Motors and Chrysler. A few short years later, the consensus was that it would be difficult to bailout Greece and almost impossible to rescue the much larger Italy. That was when we heard the most dreaded words possible: was this the new normal? Was our world so interconnected that the weak would have to be saved from their own fiscal mismanagement? Is the future of investing going to mean that when you purchase a company's stock or a country's bond, that you will have a good chance of a guaranteed investment? Dollars & Sense By Peter Watson Is our world so fragile that the risk of failure is too large for that? Would a safer environment be good for individual investors? Safety can actually harm investors. They need risk in order to be successful. Take away risk and most people's financial objectives would be almost impossible to achieve. Risk is an investor's friend. Investment return is dependent upon the amount of risk that is taken. You should earn a higher rate of return on a riskier investment provided you have the appropriate investment time frame. Equity investments have more risk than fixed income investments like bonds or treasury bills. Individuals with a financial plan depend on achieving a specific target return on their investments. Most people are not wealthy enough to avoid investment risk. A higher return objective means the investor must be willing to take on additional risk. So our question is: what has more risk successful. will be reduced. The reduction of the -- investing in equities or buying treasury That brings us back to the real risk of investment return will mean many will bills? the many bailouts the world has seen over not achieve a high enough return to meet The annual increase in value of the the past several years. their financial objectives. Canadian stock market as measured by the If investments continue to be bailed In summary, the investment world is TSX over the past 20 years up to 2010 was out, the market will perceive them to have better with risk. 9.8 per cent. less risk. We investors just have to improve on The less risky and investment in a oneLess risk means the investment return how we manage that risk. month Canadian treasury bill was 4 WE'VE MOVED per cent over the same time period. Risk is measured by the annual McT TAV AVISH TRA AVEL VEL WINS BIG McTavish T Travel is very proud of a two recent awards! uncertainty of an North America's ' Leading Travel r Agency c On November 19, 2011 in Montego Bay, Jamaica, McTavish T Travel was awarded "North America's Leading investment return. Travel Agency" in the 19th annual World Travel Awards. It's McTavish T Travel's third World Travel Award in 5 years! In 2007 and 2008, we were named "North " North America America's 's Leading Business Tr Travel ravel Agenc Agency cy". The much coveted Wo World rld Tr Travel avel Aw Awards ards are considered to be "the the Oscars of the travel The stock market is industry". Launched in 1993, the awards "acknowledge and recognise excellence in the global travel and tourism industry." A World Travel award very uncertain so it is "regarded as the very highest achievement that a travel company could hope to receive. Separating the good from the outstanding. Identifying companies that consistently excel beyond expectation. Taking customer expectations to a new, unparalleled high." For more information on the awards, is by definition riskvisit www.worldtravelawards.com ier. Canadian Travel r Agency c of the Year On December 22, 2011 McTavish T Travel was named "Canadian Travel r Agency c of the Year" in the travelhotnews.com Awards of Excellence. Give us a call and find out why!! 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