"Let me help you choose the RRSP that’ $ right for you." * “Ail options” available . « “Competitive” rates : « "Transfers" completed — Frank Donahue * “RASP Joans" at prime — Skeena Mall e “Recelpts” auditable Terrace By FILOMENA TAMBURRI 635-2987 —Ow#aR The Mutual Group A Registered Retirement Sav- Foeng tomorow ings Plan (RRSP) is a govern- ment approved plan through which you can save for your retirement, Your contributions into the plan are tax deductible and the interest you earn is tax sheltered as long as it remains in the plan. Financial experts agree that almost everyone should have an° RRSP, especially individuals who do not make contributions to any other registered pension - plan. The rationale behind an RRSP is that you save money seecive anu teuninettrasn a netenaton More interest for your RRSP money. in order to have a source of in- come when you stop working. RRSPs also allow you to defer paying income taxes on your contributions until you ter- minate the plan. It is difficult to overestimate the financial benefits of an RRSP. For example, annual \OCRONTS YS%4BONUS. For 1989/90 On 15-20 month Tertn-RRSP for contributions of $1,000) at cons- 1.5 year Termm-RRSP 1989/90 Contributions, tant interest of 9% will ac- Contributions Renewals, Transfers curmulate to $150,000 after 30 *Eristing deposits o7 transfers are not eligible for this bonus, Offers subject o change ar withdrawal al any time, Offers expire March 1, 1990. years, RRSPs are available from most financial institutions, in- cluding your bank, trust com- pany or credit union. Anyone can contribute to an RRSP, ac- cording to specified limits. In 1989 the maximum contribution you can make to an RRSP is 20 Getmore out of your RRSP. FirnsiCity Trust Your Authorized Agent is: tof ; to per cent oJ your income, upioa Frank onahue _ maximum of $3,500, minus any. TeranBC 00 contribiition you have made ‘to Tel, 635-2387 "See us s today! Carloa Valario Colleen Mackie Tony deVivelros Theresa Doucette ~ e Guaranteed Term Deposits © Equity Funds "@ Balanced Funds. "~ at competive rates _ © Bond Funds: # Self. Administered, RSP. * Dally Interest Accounts ‘@ Money Market’ Funds’ = ® RIF. ° ROYAL BANK “MUTUAL FUND 2} SERVICES INC. ‘ the plan. But since your income ‘likely will have dropped con- ~ during your peak earning years © a registered pension plan. If you do not contribute to a registered pension plan, then your RRSP contribution is 20 per cent of your income, up to a maximum. of $7,500. You can contribute to a plan until you turn 71. At that time you must close the RRSP and begin paying taxes on the money that has accumulated in siderably by then, you will be in a lower tax bracket. Your RRSP withdrawals also will be taxed at the reduced rates. Just like most other invest- ment vehicles. RRSPs provide you with choices, There are three investment options for your contributions: guaranteed funds, mutual funds and self directed plans. The plan you select depends on your will- inghess to assume risk. _ A guaranteed fund is similar to a savings account or a term deposit. Your investment is guaranteed by deposit in- surance. There are variable rate guaranteed funds, which means It’s never too soon to -splan-for. your retirement By FLORENCE TAMBURRI . There are a great many fac- tors to consider when you plan your retirement. . - Foremost, of course, is hav- ing enough money to live com- fortably after you stop working. You can seek help to guide you -in determining the best pension savings plan for your needs, At first, you may be astonished to see how much money you will need, The first step is to estimate your needs. Know what your present lifestyle costs on a mon- thly and annual basis. Then decide how you would like to live after you retire. Draw up a household budget for the first” year of your retirement using present costs. If your home will be paid. for before retirement, | remember that your housing costs will be considerably reduc- ed. But don’t forget property taxes, maintenance, utilities and insurance. When you have determined your average monthly costs, you have to adjust the sum for inflation, While nobody knows what the inflation figure actual- ly will be from one year to the next, for your planning pur- — poses you can use 6% as an . average annual increase. _ One way to ensure you will have enough money to live com- fortably. is to maximize your savings by designing your own pension plan, For example, you can supplement your contribu- tions to the mandatory Canada Pension Ptan and. your employer's plan (if applicable) with contributions toa Registered Retirement Savings Plan.and other tax-deferred sav- . ings vehicles. The key to these plans is careful planning, You should review your plans an- nually to take into. considera- tion external factors which may cause adjustments. As well as financial planning, there are many other aspects in- volved in retirement planning. These ‘are “just some Of the things ‘you may want to start thinking about. At what age should you retire? When. will [JP your.” spouse or: ‘companion *: i retire? Will: ‘your, sehtlden be. RRSP & { Your guide to tax _ planning interest rates fluctuate, and fix- ed rate guaranteed funds, which: means the interest is constant for the duration of the tenn deposit, + A mutual fund RRSP means — your contributions are invested in mutual funds. Your plan can increase or decrease in value depending on the volatility of the stock market. There is no . guaranteed rate of return on your money and administration fees are common, You should be aware that if the ‘market takes a downturn, you could be placing your original contribu- tion, not just the interest in jeopardy, = A self directed RRSP allows you to make your own invest- ment decisions but a trustee per- forms all the administrative work for you. Administration and transaction fees commonly are applied, Untess you have the investment. experience and the | time to devote to a self directed plan, you should proceed with extreme caution While RRSPs are considered attractive investments, there are financially independent? How do you want to spend your retirement? If your current social life revolves around your work life, can you adjust to a different environment? What is the state of your health and that of your spouse or companion? A great tax break By MARYLOU McDONALD | Think of your RRSP as being the dental floss of your savings and investment program. An RRSP is one of the few remain- ing tax breaks still available to ordinary Canadians. Not only is the yearly RRSP contribution tax. deductible, the money within an RRSP is sheltered while inside the plan. Used pro- perly, an RRSP can accumulate the capital you-will need to live in: financial dignity .at retire- ment. No other vehicle has the potential to produce the growth that-a tax shelter can. In light of the above, it’s sur- prising how many people still leave such an important invest- ment decision to the last minute scramble of ‘‘buying. an RRSP”. But one'doesn’t “Buy a RRSP”; one buys an invest- ment to put into an RRSP: | ‘Think of your RRSP as an umbrella to shelter a variety of acceptable investments. You need debt instruments (i.e. GIC's, term deposits,. govern- ment. or corporate bonds, CSB’s, zero coupons, etc.) as well as equities (i.e, Canadian Mutual Funds, common stocks) to maximize your growth poten- tial, The older and thus, the . closer a person is to retirement, the lower the equity side of the portfolio should be. The reverse. is usually: true for the younger investor. ess In: devising: your’ ‘retirement plan you have to Juggle three + before retirement?’ 8 The amount ° of money you: things: * How much time d you: haye. a The dental. floss of you ine some factors that you ‘should examine before making a pur- - ‘chase. The first factor is risk, If you want a high return, ‘you must be prepared to accept a higher risk. A guaranteed fund, - for example is extremely ‘safe but it tends to yield lower returns than a. mutual fund RRSP. Assume a level of :risk - that makes you comfortable. Consider the fees that may apply to a plan. They. can reduce your investment. Decide if you are comfortable with locking your money into a plan © for an extended period of time. ‘If you prefer a short-term in- vestment, make sure your plan _can be terminated quickly at'no cost. However, don’t forget to ‘examine the tax implications of such a move, Lastly, ask about insurance protection on your funds. There is no insurance on mutual fund RRSPs nor on most self- directed plans. Filomena Tamburri_ is Publications Co-ordinator for the Canadian Co-operative Credit Society.” Retirement does bring. ama- jor change in your lifestyle:: Good planning will help you to make the adjustment a positive experience, Be imaginative, but be realistic too. Start gathering that information today and:put- that retirement plan in place. can save ® The return on the money in- vested - A self directed RRSP gives access to all of the above men- tioned investments. Diversifica- tion not only reduces risk, it also enhances growth potential with a greater exposure to a variety of market vehicles ‘and market sectors. The ‘self directed’ nomenclenture is misleading in that one is not left totally on their own to make investment: decisions; your stock broker/investment plans aren’t for everyone and should not usually be employed until. a minimum of 7-10 thousand dollars of investment. monies are available. ; There arc no changes in the, RRSP contribution limits for. 1989 and 1990. For both years,: ‘individuals may contribute. the. lesser of 20 per cent of earned: income to a maximum of $7,500 if not a member of a Registered Pension Plan .and.’$3,500 less. their plan contribution if a pen- sion plan member. These levels will change for both the Pension Plan member and non member in 1991. Poverty ig not having enough, Too many Canadians drift into poverty with inadequate, sav-’. ings, ‘unwatched investments, and misguided faith in pensions that may deteriorate under the: . pressures. of inflation. Don’t let that be you. Plan for the future you want — Don’t be a victim of poor planning. Make use of ‘the RRSP as a basic. ingedieat: ° vestment, planning,