14 — Wednesday, August 5, 1998 ~ North Shore News
north shore news

BUSINESS

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om.

s

RU BBISH Boys’ Tyler Wright makes himseif comfcrtable on a couch he placed on top of his Volkswagen bug.
was an item a former client had asked Wright to throw out and helps him advertise his service.

s;say your investment
50% one.y

a roller coaster,”
Fi ‘Tl was tempted to
get off ar the bottom but I’m
glad T hung on because
Over the two years my invest-
ent averaged 10
but you “iil lost
need to check
not only percentage returns
but also'the actual amount of

year fo!
. low ‘by a gain of 70% the

203-isas w. 8TH AVE. Vancouver ac

2a of | Practice:

- -Mext year works out to an

average annual yield of 10%.
-Yet your investment in actual
loliars drops 15%.

Bottom line: Forget about .

averages and to a degree,
‘about percentages. Instead,
"look at an investment’s per-
formance on an annual and, ’
dollar basis.

"Canada’s mutual fund.
industry agreed last month to
provide investors with a per-
centage return to show how

. their investments, rather thai

-fust th the fund, performed.
- - And financial advisers have
always suggested you look at
__ Year-by-year performance

‘rather than an average annual —

return.
. But again, ifa fund (or
any other investment) drops

". sharply in one year, it will

take a far higher gain just to
get back to the breakeven
point, let alone give you a
profit,

Exampl!e: Your $10,000
investment drops 50% to
$5,000. Then it gains 12% a-
year for the next five years.
You might think you’d have a
slight profit because your

Growth followed by loss
can produce equally mislead-
ing averages. Let’s say your
$10,000 investment grew
50% the first year, then lost
een r.+ cent a year for five

x4 would end up with
$9.8 386, a loss of 1.1% despite
the “ average annual growth”

of 1.66'

_— Copyright 1998 Mike
Grenby

Mike Grenby is a columnist
and independent personal
financial adviser; he'll answer
questions in this column as
space allows but cannot reply
personally — contact him at
P.O. Box 50029, South Slope
RPO, Burnaby, BC. V5]
5G3; e-mail mik by.com
and sce previous columns at
Mike’s website,
wwwgrenby.com

Mortgage
Lender

fm v when the banks say “no”
_v when speed counts —
/ low rates and fees

“Celebrating our 15th Anntversary.

investment. earned an average . 3

annual return of 1.66%, But °
you actually end up with only
38, 812.

You'd ‘have to carn almost |

15% a year compounded for.
five years to get back to your
$10,000 — zero growth for
you over the full six years.

Award Winner For
3 Consecutive Years
* 5 Gold Georgies

9 Silver Georgies

1 National Award

Te L. 732-6639

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