Risky versus Safe Investments

I often hear that Guaranteed Investment Certificates (GICs) are risk free because they protect your capital, much like a savings account would be considered risk free. Although this makes sense on the surface, these “safe” investments are anything but.

What is Risk?

Risk refers to the degree of uncertainty of achieving an expected rate of return. Thus, if all factors are equal, the degree of risk (uncertainty) and the expected rate of return should correlate accordingly. Ideally, more uncertainty, more expected return.

Impact of Inflation

One risk with all investments, including GICs is a long-term inability to keep pace with inflation. Essentially, the cost of living continues to increase and if your money isn’t keeping pace, your purchasing power decreases. A million dollars in 1988 (when the Bare-Naked Ladies would purchase a house, a K-Car, and really expensive ketchup) bought you a lot more than a million dollars will buy you today. A loaf of bread at the time was under $1 while the current average for boring bagged bread is around $3.

But Doesn’t a GIC Pay More Than Inflation?

Let’s look at an example based on known history. If you retired in 1989 with $500,000 in non-registered capital invested in a GIC and withdrew a net of $26,707 from this savings for annual spending, adjusted for inflation and taxation on the investment earnings, you would have run out of money in 20 years.(1) And keep in mind that GICs paid much better in the ‘90s at upwards to 7.1% for a 5 year GIC when inflation was 1.7% (2).

What are my Options?

Because no investment is risk free, and because hindsight is 20/20, we can use the same 20 year period invested in the TSX and S&P 500 indexes, with their fluctuating market valuation, and after 20 years you still had $360,627 left.(1)

I’m not saying you should invest in these markets specifically, especially during a withdrawal phase, but you should be aware that there are other options that can do a better job long term to keep up with inflation.

Other Components of Risk

Inflation and taxation both play integral roles in understanding your true rate of return and purchasing power for all investments, but you shouldn’t negate other factors of risk to define what is ultimately suitable for you, your goals and long-term needs.

Throughout history, variability in markets is really a short-term risk, just pull up an image of an Andex® chart to see the historical long-term growth of various investments.

Other factors to consider include currency risks, geographic and political risks, liquidity (ability to get usable cash when you want it) risks and timing of withdrawals (having to cash out an investment when markets are down create a permanent loss that can’t be recovered from).

The Bottom Line

The truth is what is often considered “risk free” is really just “comfortable”. It provides uneducated investors with a false sense of security based on knowing that their capital isn’t subject to stock market sentiment of day. Understanding that no investment is truly risk free will allow you to make more suitable investment decisions based on your comfort level as a well-educated investor.

  1. calculations provided by PlanPlus Planit
  2. 1995 values as reported https://www.ratehub.ca/blog/the-history-of-gic-rates/


Have more questions? As your Chief Financial Officer, I am here to help you make smart financial decisions that align with your business growth, personal wealth creation strategy and long-term interests. Helping you understand your money and assisting you in making informed decisions about your investment options are just some of the ways that I work as your fiduciary.

Educating you is just one piece of being your personal CFO that we excel at. Call (780-261-3098) or email (Roxanne@C3wealthadvisors.ca) today to set up your next conversation with us.

Roxanne Arnal is a former Optometrist, Professional Corporation President, and practice owner. Today she is on a mission to Empower You & Your Wealth with Clarity, Confidence & Control.

These articles are for information purposes only and are not a replacement for personal financial planning. Everyone’s circumstances and needs are different. Errors and Omissions exempt.


Optometrist and Certified Financial Planner

Roxanne Arnal graduated from UW School of Optometry in 1995 and is a past-president of the Alberta Association of Optometrists (AAO) and the Canadian Association of Optometry Students (CAOS).  She subsequently built a thriving optometric practice in rural Alberta.

Roxanne took the decision in  2012 to leave optometry and become a financial planning professional.  She now focuses on providing services to Optometrists with a plan to parlay her unique expertise to help optometric practices and their families across the country meet their goals through astute financial planning and decision making.

Roxanne splits EWO podcast hosting duties with Dr. Glen Chiasson.


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Practices have faced huge challenges and have undergone an incredible amount of change over the past few years, and this won’t slow down in 2023. The time has come now for practices to deal with the aftereffects of the global pandemic, increase in interest rates along with the rise of inflation.

The market for optometry sales is becoming quite interesting. In the past, most practices were sold privately to partners or associates, the true values of these practices were not tested by the open market. As such, the level of value was not necessarily as high as that of their dental and veterinary counterparts. This is now clearly changing as the market develops.

In general, valuations for healthcare practices are driven by two overriding forces: the industry’s appeal and current macroeconomic conditions.

1. The attractiveness of the industry can be summarized by these key factors:
• You have shown that optometric services are recession and pandemic-resistant, demonstrating quality performance relative to other businesses in challenging times;
• Aging population; and
• Solid historical growth rates of four to five percent, with a good outlook on future growth rates.

2. Macroeconomic conditions, the second force impacting valuations, affect prices because of the following factors:
• Record low-interest rates during the past decade, making capital cheap for practice buyers;
• Stable economic conditions and slow, but steady, economic growth; and
• An abundance of investment capital, and many investors finding our resilient industry to place their funds.

The last 3 months have certainly had an impact on individual doctors looking to purchase. The sharp rise in interest rates and the above average offers from corporate buyers have impacted the decision to purchase. Furthermore, with corporates offering sizeable compensation packages and signing bonuses, the idea of owning vs., being an employee is significantly less attractive. Younger doctors are burdened with huge amounts of student debt and seeking better work/life balance creating less interest in ownership among those under 45 than prior generations.

For owners, this is where practice values become a bit tricky. We predict the value of practices will decrease. This is simply because if key expenses such as wages and supplies increase, then net income will decrease. Cashflow plays a huge factor in determining the value. Therefore, if an independent owner is going to compete against the corporates in attracting and retaining doctors and staff in general, the owner will not only have to pay more but also consider offering signing bonuses. This is certainly a tough pill to swallow. Owners had a difficult enough time accepting that younger doctors wanted work -, life balance, but signing bonuses? What could be next?

As much as things may feel or look bleak, all is not lost. Good practices, continue to appeal to the right buyer. Business cycles have a wonderful way of self correcting. If you are not ready to sell for at least 5 years, now is the time to plan and be prepared to manage your finances with this in mind. Find out what your practice is worth now and budget for the proceeds of sale in your financial plan. There are a few reputable and experienced appraisers to choose from.

Ask yourself the following questions:

  • Do I know the value of my practice today?
  • Are there any reasonable overhead reductions I can make?
  • Can I invest in new technology to add additional revenue or improve efficiency?
  • Can I keep my gross income stable or, even better, increase it? As a note, practices in any state of decline worry buyers and usually attract a lower sale price.

The final thought as we move into 2023 is to “Keep Calm and Carry On”. The challenges that may come are ones that can be managed provided they are faced head on. I would like to leave you with one of my favourite quotes from Barack Obama “The future rewards those who press on. I don’t have time to feel sorry for myself. I do not have time to complain. I’m going to press on.”

Jackie Joachim, COO ROI Corp


Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.


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The market has continued to change.  Many are asking great questions about corporate buyers, and the impact of the rise interest rates and inflation on practice values.

Healthcare is (still) Recession and Pandemic Resilient
The market continues to expand and corporate buyers, like traditional ones, see the value in healthcare. I may sound like a broken record, especially now that we are 2 years past those initial dark days, but healthcare has proven it is recession and pandemic resilience.

People simply need humans to take care of them. Rates of return on healthcare businesses are 8% or more depending on cost structures.

The Numbers Game (Hint: It’s Not a Game)
An individual doctor will always purchase a practice unless they want to be a career associate.  A corporate entity will go after an office where an improvement in gross revenue can be made through the increase of hours and services while also, of course, trimming expenses as well.

Practice sellers may not like their hard work broken down into “simple numbers” but the reality is that numbers drive corporate decision makers. It is just business.

Sometimes corporates will pay more than an private individual doctor purchaser and other times not.
Ultimately, a vendor must put personal feelings and ego aside in order to make the decision that makes most sense for them.

Market influencers – interest rates and inflation
Good news, historically, despite the varying rates, practice values have continued to rise.  They may jump more in value at certain times and less in others but in reality, the actual values have not decreased in my 30 years of being in this industry.

These past couple of years have certainly been interesting.  Despite a pandemic and increasing inflation, values have continued to rise.

This is simple economics – supply and demand.   There continues to be more buyers than good practices available. The vendors who may have chosen to delay due to pandemic by holding on, continue to put pressure on purchasers who are looking for something to buy.

Lenders also continue to fund these acquisitions provided that the buyer can qualify.  As long as this cycle continues, values will not be negatively impacted.

Can the rise in interest rates affect a practice value?
My initial answer is no BUT I do feel the need to qualify my response.

There are certain transactions that a bank will not provide 100% which means the buyer must put some money into the deal to successfully close.

This does not mean the practice is overvalued. It simply means that based on risk, a lender is comfortable in financing only a certain percentage of the purchase price.

The market has been trained in the past 20+ years to expect 100% financing.  However, many factors have changed significantly such as increased practice values along with increased, personal debt load of purchasers.

Practice value is not synonymous with level of financing.  Values are separate from the level of financing a bank will offer a purchaser.  For example, an insurance brokerage will sell for 12-15x EBITDA yet lenders do not finance this level.

Inflation can cause practice values to decrease.

It is quite simple – the more expenses rise (staffing, supplies, PPE), the more the net profit is negatively affected.

As such, value is impacted.  Therefore, before anyone opines as to whether higher rates and inflation impacts value, the real assessment is how these factors affect a practice on a case per case basis.

A blanket statement is always a dangerous thing to make.

It should also be noted, the final practice value is truly determined by the price a vendor and purchaser agree to. Even if increased expenses bring value down, a buyer can still offer more if they see opportunities in the practice.

Jackie Joachim, COO ROI Corp


Jackie has 30 years of experience in the industry as a former banker and now the Chief Operating Officer of ROI Corporation. Please contact her at Jackie.joachim@roicorp.com or 1-844-764-2020.


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