In a couple of months, I’ll be sitting down with my financial planner to discuss investments as part of an annual ritual that coincides with RRSP season.
One of the questions he always asks is about my tolerance for risk. In other words, do I want to go for an investment that could have a high yield, but also is a bit of a gamble, or do I wish to be more conservative and concentrate on steady, less risky purchases.
It always reminds me of the risk-reward concept in golf. Hit the ball over water to the green and you may be looking at birdie, but your ball could just as easily go plunk and suddenly you’re looking at a big number.
The other alternative is to take a safer route and perhaps get par, but avoid the big number by putting it in the drink.
Plunk is not a sound you want to hear when it comes to your investments. Personally, I heard plenty of that when the recession hit hard a couple of years ago and it was far from music to my ears.
Although I will put some money into riskier investments, I’ve been somewhat conservative the past few years for two reasons.
First of all, I’m not getting any younger and hearing a plunk at this stage of my life is a setback that isn’t as easy to recover from as it was a decade or two ago. Secondly, I’m still not confident in the economy.
That’s not to say that I believe we’re still in the dark days of two years ago, but I’m not entirely convinced that we’re safely out of trouble yet.
On the global scene, look at economic turmoil in Ireland, Greece and across Europe. On the national front, do we really know what’s going to happen if government economic stimulus programs end next year?
On my particular local scene, hydro rates are soaring, gas is going up again and the HST is in its first year and you wonder, with government and corporations taking turns reaching into your wallet, how enthusiastic people will be to spend what’s left over.
There’s a lot in the way of uncertainty and very little in the way of answers on the economic front these days. Where I’ll be in two months is where many people in the golf industry are right now as they look ahead to 2011.
With year-ends about done these days, many within the industry are forecasting what’s ahead and what they need. So are capital expenditures such as a clubhouse renovation or the purchase of expensive equipment in the cards, or can you or can your operation make do with what you’ve got for another year?
Again, we’re talking about risk tolerance and consideration of all economic factors, uncertain as they are, that exist today. The mood of the industry compared to a year ago is what we’re hoping to figure out with this week’s GNN Poll.
Is your operation more likely or less likely to make a large capital expenditure than it was at this time last year?
- Less likely (76%)
- More likely (24%)
As always, we welcome your expanded thoughts on this subject in the Comments section below.