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Bi0 - The Terrace Standard, Wednesday, February 19, 1997

Top ten RRSP strategies for your 30s and 40s

(NCj)—It's that time of the year
again—the season when thousands of
Canadians are caught up in the jast-
minute rush to contribute to their
Registered Retirement Savings Plans
(RRSPs) before the March I deadline,
Avoid the frustration of last-minute
decisions by taking the time to-assess
your position and adjust’ your. invest-
ment strategy. Here are some important
steps you can take lo gel the most out of
your RRSP, -provided by Investors

Group, one of Canada’ 's leading personal

financial services companics.

1. Contribute early. Make your
contribution “as early in the year as
possible. Tax-deferred compounding
makes those ‘carly dollars grow
dramatically.

2. Contribute the maximum. Take
advantage of the magic of compounding
and get the maximum. tax break ‘by
contributing to your limit. For the 1996
lax year, you.can invest up to 18 per
cent of yourcarned income for 1995, te
a maximum of $13,500.(less your 1995
pension adjustment and less past
service pension adjustments, if any).
Remember, while you: can “carry
forward” any unused contributions’ to
subsequent years (indefinitely), you can
never replace lost growth opportunity.

3. Invest monthly. Many investors
find it easier to reach their annual
RRSP maximum by making contri-
butions every month. You may find it
easier lo have the RRSP contribution
automatically deducted’ from: your
accounteach month, or you may choose
te belong to a group RRSP through
your employer by payroll deduction.
Remember, it's a good idea to increase
your monthly contribution if your
income rises.

4, Borrow if you have to. Don’t let
tight cash flow deter you from borrow-
ing to top up your contribution.
Although you'll pay interest on the

amount borrowed, the compound growth
of your maney over the long term can
far outweigh the interest cost, Plus, you
can use your tax refund to pay off a
substantial portion of the amount
borrowed.

5. Invest in a spousal RRSP. A
spousal RRSP allows the partner with
the higher income to contribute to ‘an
RRSP in the name of the lower-income
partner. The spouse with the higher
income takes. the immediate tax
deduction, but the money in the RRSP
will be taxed in the other spouse's hands,
usually at_a- lower rate, when it is
withdrawn. This is an excellent way to
income’split ‘in retirement and ‘reduce
your combined tax rate,

§. Diversify. Different types of
investments react: differently to
economic events. By diversifying
your portfolio and holding -invest-
ments of all types, you protect yourself
against the day-to-day fluctuations in
any one category. To achieve long-term
growth you must diversify. Some
investors limit themselves to fixed-

income investments, but inflation can
have a corrosive effect on conservative
investments. Consider diversifying
into growth-oriented securities—such
as equities and equity mutual funds—
to earn returns that may far outstrip the
rate of inflation:

7, Increase your foreign content.
Currently, you're allowed to invest up
to 20 per cent of your RRSP ta foreign
holdings. The advantage? Investing
oulside Canada taps -you into the other
97 per cent of world markets. giving
you additional opportunities for
growth and diversification.

. 8, Consolidate your investments,
If you are the type of investor who
doesn’t want to spend‘a great deal of
time managing several plans, you may
want to consolidate your investments
into one portfolio. Yes, you should have
a balanced variety. of holdings work-
ing for you, but you can combine them
under one RRSP umbrella. This strategy
aiso means. you ‘will get one con-
solidated statement (which may make
it easier to track your plan).

9, Designate a beneficiary.
Consider designating someone to whom
the plan assets should go in the event of
your death. Without o designated
beneficiary the account will go through
your estate and be subject to probate
and other fees. You should talk to your
financial advisor about the tax and
other consequences of designating a
beneficiary to your RRSP.

10. Get expert help. The services
of a personal financial planner are
essential tohelp you make the rightiong-
term investment decisions. Together,
teview your plan al least once a year to
make sure that its performance is still
on track with your long-term goals,
Naturally, your needs may change over
time, and your advisor can help make
any necessary changes to your portfolio.

Willy Schneider,
| Laurie Mitchell ;

635-6146)

Tax changes
concerning

(NC)—Do you feel anxious at the
prospect of asking to borrow monty
from a financial institution? Are you
unsure of what's required and how you'll
be evaluated? Although borrowing
money may seem difficult, there are
some simple ways to help you prepare
your request.

To begin, a simple formula can be
applied to help you understand your
ability to pay back what you now owe
and what you are looking to borrow:

* total your amount of monthly debt
payments (loans, mortgages, credit .
cards) and the amount of any
obligated payrnents (rent, family
support);

* divide this amount by your gross
monthly pay (before taxes and
deductions, you will need to prove
your income by summarizing your
salary, stock dividends, interest, etc.)

RRSPs

(NC)—Incoame taxes can be confusing,
especially when the ground mules are
subject to change each year. Here are
some of the cianges affecting RRSPs
for the 1996 taxation year and beyond:

* Contribution limits for registered
retirement savings plans’ (RRSPs) and
money-purchase registered pension
plans (RPPs) will be $13,500 for 1996,
and remain al this amount. through

2003. In 2004, the limit will increase to

$14,500. and in 2005 it will be $15,500.
For the years that follow, the limit
will be indexed to the average wage,

» Beginning in 1997, RRSPs and RPPs

wil] mature when the holder reaches
the age of 69, changed from age 71.

* The allowance for -over-
contributions to RRSPs is reduced from
$8,000 10 $2,000 beginning in 1996:
The reduction will be phased in for
taxpayers with excess contributions on
February 26, 1995.

* Retiring allowance rollovers to
RRSPs have been eliminated in respect
to years of service after 1995.

* The 1996 federal budget proposed
that the seven-year carry-forward af
unused RRSP contribution room be
eliminated and replaced by a lifetime
carry-forward,

» The deduction for self-administered

RRSP administration fees paid outside
the plan will be eliminated.

and multiply by 100 to obtain your
debt servicing percentage; —

Although Not carved in stone, a 35%
debt-servicing percentage or under is
ideal for borrowing, If your debt-
percentage is over 35% that does not
mean you can't.borrow-—it may entail
other security arrangements.

Your bank will review your credit
bureayy report to understand how you
have managed your debts in the past.
You may get a copy for yourself from
the credit bureau and, if you wish, they
can explain the contents af the report ta
you.

Lastly, make sure you've finalized
your borrowing needs—do you require
money now to replace your furnace or
Upgrade your compuler? Or will your
needs perhaps be greater in a year when
you are looking ta make major
renovations on your home?

All of this groundwork will help you
overcome any anxiety you may have in
climbing that “staircase” to borrowing
money. You're now prepared to
approach your financial institution 10
negotiate a toan or a line of credit.

Balance is the key to performance.
If it's results you're looking for in your RRSP investments, the AGF Growth & Income Fund
hos heen delivering them for years. This fund has consistently performed among the top 25%

of Conadian bolonced funds™. Consisting of a diversified selection of equities, bonds, and
money market securities, this is the perfect fund for investors seeking an adively managed,

yet balanced portfolio.
Tyr. | 3 yrs.| 5 yrs.| 10 yrs.
9.4%

23.6% | 12.1%} 13.2%

For more information please contact:

PRIPE PFSL Canada Ltd.

Ph: 635-7800 or 1-800-295-7676

A Membec of TravelersGroupt"

Don’t forget

* The RRSP deadline
for the 1996 tax year is
March I, 1997,

PPSL Investments Coneda Ltd, Mutual Fund Dealer GROUP OF FUNDS

All totes of return arg historical cnnual compounded rates af return {%) to December 31, 1996. tmiportant information obout these mutual funds is
contained in the simpitied prospectus ond should $a rend carafully before investing. Obtain c copy from on Investment odvisor or ACF Funds tre. All
retuins are historical unnual compounded totol returns for securities sold with o front-end soles charge ond indude charges in unit vole and distribu-
tion reiavestted. Thay do not (ake into otcount sales redemption, monogement fee chonges or charges payob's by security holders. Post performance
i nol indicative of future results. Unit volug, yield ond investmest retute will fucturote. Designed by AGF Funds Inc, “Bell(harts, Ravember 30, 1996.

»* If you're turning 69, 70 or 71
in 1997, you may need to
convert your RRSPs to RRIFs.

Financial Advice Pays Bigger Returns

If you've ever thought that
puying a commission for financial
advice is o waste af money, think
again. A recent U.S. study shows
that mutual fund investors who
use financial advisers actually do
beller than “do-it-yourself”
investors,

The study, conducted by the
indusiry analysts Dalbar Financial
services, shows thal investors who
paid for financial advice saw
their money go up 96.38 per cent
on equily mutuol funds from

. January 1, 1984 to June 30,

1985, That compares to 79.5]
per cent for do-it-yourself inves-
tors, and tekes into account
management fees and commis-
sions paid far the investment.

"Finoncial advisers con bring
real value to investors because
most people just don’t have the
time,” says Elizabeth Hoyle, vice-
president of marketing for
Trimark Mutual Funds. "Financial
advisers can help you determine
your risk level, develop o plan
and stick to it. Mos! importantly,
financiol advisers prevent people
from ponicking. {t's reacting to
short-term ups and downs thot
touses do-it-yourself investors to
lose out hy selling low and buying
high.”

Investors con buy mutual funds
directly from financial institutions

such os banks, or through inde-
pendent financial advisers. Those
who buy directly ore colled no-
load investors because they don't
pay for ony service. They make
their own investment

Peter Arcadi —
Branch Manager with Primerica
Financial Services [n Terrace

decisions. Thase who buy from
advisers either pay o fee up front
or at the back-end when they
redeem the fund. Bath types of
investors pay management fees
Io the fund company for money
management,

The Dalbur study shows that
investors with finoncial advisers
hold on to their investments fong-
ef. They don’t panic becouse their
financial adviser hos already
exploined fo them the short-term
volatility of the stock market, By
comporison, investors who buy
mulual funds directly generally
ponic, make poor market-timing
decisions and chase high

performers.

The do-it-yourself approach
ton work for some people who
are prepored to put the lime into
it. But the research shows thot it
noys to use professional financial
advice.

Investors With
Financial Advisers

Eorr Higher Returns
From January 1, 1984 to June
30, 1995, investors with finential
advisers saw the value of their
investments increase by 96.38
per cent on equity mutual funds.
During the same period, direct
investors earned on average
return of 79.51 per cent.

100% 96.38
—

BO 79.51 : | Investors
60% purdhesing

mutual funds
40% daly
20%

investors with
0% finendal

advisers

Equity Funds
Your unit vate ond investment return

will fluctuate. Important informotion
ahoul ony mutual fund is contained in its
simplified prospects. Read your prospectus
carefully before investing.
You can adtain one from:
Peter Arcadi, PFSL Investments Conode
Lid.
Phone: 635-7800 or

1-800-295-7676.

At last,a GIC with guts.

Scotia’s 2-Year Stock-Indexed
GIC. With rate of return

tied to the performance of the
Toronto 35 Index”, it offers
you the potential for stock
market gains with the secutity ofa a GIC. Find out more about this safe way to
earn potentially greater returns. Drop in or call us at 1-800-387-6507

Bl

' Peuirstach file sad it
1D wuitrevire

Wve trem (Ie issue de.
She Deronta 35 ides

Shows a negative return Fullamount of principat

Increases by 0-20% Prinvipal + actual % incresse

Principal + 20%

Tnereases by more than 20%

Scotiabank &

ww. scollabank. Ca

4602 Lakelse Ave.
Terrace, B.C.
635-2261

. The Bank of Nova Scotic, Montreal Trus! Company of Conode reserve the tight to > witha
- this offer ot ony tine. ™The “Toronto 35* iso rade-mark of The Toronto Stock Exchange (the *Exchange*)
ond all rights ore reserved, The Exchange Is not asiociated with wed rave, and use of the trade-mark does hat conititute
endorsement of tha product the Exchonge, *Registered Trade-mark of The Bank of Nova Seolias

RRSP Loans Below Prime

Short of cash to
make your RRSP
contribution?
There's no need to
worry, thanks lo
Northern Savings.
From now until
March Ist, we're
offering RRSP Loans

Drop inie your local branch today,

Prince Rupert
627-757

SOURCE,

Dont miss ait

N/

NORTHERN

SAVINGS
Masset
626-5231

Queen Charlotte
559-4407

_RRSP HIGHLIGHT #1

ata very attractive
BELOW PRIME rate.
Simply commit toa
monthly contribution
plan of $50 or more
per month, and you'll
receive a 1/4%
reduction on our

already low, low rates.

Terrace
638-7822