7.3.2 Return on investment

The return that an investor receives on an investment (often called return on investment or ROI) varies greatly and, for many investments, cannot be predicted reliably. (If it could, the return would be low because there would be little risk.)

Past performance is not a guarantee of future performance. That means that the return that investors received in the past is not a reliable guide to what they will receive in the future. Market conditions and other factors can change rapidly, making an investment that was once a winner into a loser—and vice versa.

An investing strategy called dollar-cost-averaging reduces the risk of investing when the market rises and falls. Under this strategy, you invest a pre-set amount on a regular basis—bi-weekly or monthly for example. When share prices are lower, your investment buys more shares, and when prices are higher, your investment buys fewer. You benefit by having a lower average cost, and by building your investment consistently over time. However, this strategy does not work for all investments, and should be reviewed with your investment advisor.