* é

82° 9M men,

” invesiment) ‘funds -may. be. ari
- answer. Conainly many Canadians -

_ guarantees" _
Those are the advantages, but of .

vestments day: by.day, mutual (or

think so —-2,60,000 or more of us,

: invest n2400 or more ‘different

“There's no ere amystery. about

 .themutuals. They're simply profes-

sionally managed portfolios in
. which investors :poot their money

and share in the:growth, if as and

whenthere is growih. |
And because of ‘diversification

within ‘tht portfolio, fund par-

‘ticipants own:a wide variety of in-
vestrhents and are able to reduce
- Aieir tisk somewhat (compared to
-buying one or two securities only).
Fulttime. = - °
management

Each fund:employs full-time
‘management to maintain a constant

review of the -fund’s position,
buying and selling holdings as con-
.. Sidered, necessary. So you don’t
have to worry about decisions on
when ito ‘buy or sell — the fund

- management does it for you.
‘Throughout, too, your holdings
are liquid because you can always

- “sell your holdings at current values.

No profit

course there’s a downside too. First,

_ thereareno guarantees of profit. All

funds rise and fall with the stock -
markets and the economy. And’.

"you'll have to pay to participate in
. most funds before you start, Check
carefully because feesand commis-
' sions vary widely.
What's your
objective? | eo
It’s important to chose funds

designed to achieve your particular .
investment objectives. So you must
be clear about what your objectives
~ are. Do-you-want to build capital or

Timely taxtip

If you had net capital losses in
4988, you may only be able to.
deduct them against taxable capital
gains of other years and not against

other sources of income.

| _ investors professional

If you have neither the expertise -

glorihe time tomanage your ownin- ”
> smuch risk are you prepared to take.

generate income? Or'do you need
special lax considerations? How
for higher yiclds? st

There's a bewildering array of

_ choices out there and new funds are

‘popping up all the time, ~
- It’s important to distinguish be-
tween the debt and equity funds. -
Equity funds invest in stocks, the
common shares of publicly traded.
companies. Debt funds invest in
various kinds of debt instruments
such as mortgages, guaranteed in-
come certificates and Treasury
Bills. At one time funds focussed
primarily on common shares but

today some 40 per cent of assets in -

Canadian-based funds arc invested
in various debt securitics. —
To choose a fund or funds, the In-

~ vestment Funds Institute of Canada

recommends you check the mutual
fund tables in newspapers’ business .
pages to.compare long-term perfor-
mances. Keep in mind, the tables
tell you about the past, not the fu-

POOLED RESOU

expertise

_jmanagement?. -

"The capability. of aby fund's

‘management is also important-be-- -

cause thefundis only as good as the:

- people sunning it.- When you've .

narrowed your choice down.to a
few top performers in the category,
that matches your objectives, check "
whether there have been changes in

the fund’s senior management.

Then compare sales and redemp-
tion charges as well as annual
management fees, mo
For detailed information on any
fund, including its investment ob-. '
jectives and current holdings, con-
tact the fund directly for its
simplified prospectus, quarterly

reports and annual information

form.. ~

For an information package on |
mutual funds plus alistoffundsand_

their addresses, write the Invest-
ment Funds Institute of Canada, 70
Bond St., Toronto, Ont. MSB 1X2.

RCES|

Clubs reduce

More and more Canadians are dis-
covering that investment clubs
make it easier to get into the market
— and reduce risks into the bargain.

Essentially, a club enables a small
group.of members to pool their

‘resources and decide on a common
investment strategy, sharing inthe
gains or losses together. It's a good
way to invest without risking more
than you can afford to lose: and
means you can participate in a
wider portfolio than would be pos-
‘sible on vour Own. ~

The Toronto-Dominion Bank es-.

—timates that more than: 250,000
Canadiansalready belong toinvest-
ment clubs and says membership in
-the Canadian Association of Invest-
ment Clubs (CAIC) has doubled to
300 clubs in the past three years.

“Starting a club is fairly simple,”
the bank says. “Since clubs have the

legal status of partnerships, they
don’t have to be registered. Thereis .

no limit to club size except in On-
tario, where securities regulations
state that if membership exceeds
50, the club must become a mutual:
fund.”
20 members

ideal size Oo

Doug Smith, chairman of the

CAIC, says a good size is 20 mem-
bers. Each member contributes a
lump sum at the beginning and
regular amounts periodically. For a
membership of 20, Smith suggests
monthly fees of $100 each to give
the club a good base to start. Mem-

bers meet monthly to discuss the-

performance of their stocks and
make new investment decisions.
When enough cash is built up,
choosea broker torecommenda list
of stocks, Smith says. Members
then review the list before making
final selections. He stresses that
clubs should'stick with safe blue-
chip stocks that give a reasonable

._ | relatively new ,on

financial scene, But they're in-
“greasingly popular and worth
looking into, especially for
smaller investors. Upwards of 100 -
corporations now offer the plans
in various forms and the number
isgrowing, =e
"Essentially, reinvestment plans _
enable you to roll over dividends |
from your shares in a corporation -

| w buy additional shares at alower
‘| net cost than if you bought them

in the normal way through a-
broker. wo
In many cases, there areno com-,
mission charges to pay and some ~
corporations actually offer exist-
ing shareholders a discount on
new shares purchased with |
dividend proceeds. Some also
‘permit you to buy’ additional
shares at a similar discount (often
95 per cent of current market.
price); all without commission.
The plans can be particularly

_ Avoid

useful to smaller-scale investors
whose commission charges are -

shares, although this is fess likely

tors.
Can ‘you addi
shares in your RRSP? The regula-
tions say you can, although some
brokers ‘tend to discourage the
practice because of the amount of
unproductive paperwork involved
for them. So it makes sense to
‘determine your broker's policy in
‘advance, - ae

‘The Toronto Stock Exchange has

a brochure to explain how] |

dividend reinvestment plans work |
and which corporations offer:
them. The brochure is available at
Exchange Tower, 2 First

-M5X 132.

assurance of dividends and some
expectation of capital gains while
members leam thé finer points of
investing. . . -

penny stockS se

“Stay away from penny stocks,
futures or commodities,”,.he ad-
vises, recommending: shares of
companies favored by. large. pen-

- sion funds, Those funds can’t afford

to take much risk.
Smith suggests a club buy shares
regularly and reinvest all earnings.

for. the first few years. It’s also

desirable that all members have the
same investment goals, he says..
One of the most important rules is

deciding how many new people can .

join aclub once it's off and running
and how members who want to

leave cam take their funds outof the .

common pool. Acommon downfall
for some clubs is members who be-
come too lazy to do their homework

r

on stocks, relying on'tips, hunches ©

and odd items of information that"

can add up to a loss situation, ~~
Other clubs tend to’ become |

isks

“cocky” after a few successful in-

“2 vestments. Then members start .
speculating on an unproven stock .
that eventually flops — along with

theclub,
Club manual
Is available ~

To set up a club and avoid ‘many. ,

of the pitfalls as you do so, Smith's

association offers a manual for $21 wo
that contains a model constitution, -
bylaws, information on income tax |

implications, and sources to help

you research stacks and obtain .

other advice.

Association of Investment Clubs,

Canadian Place,.Toronto, Ont.
M5X IE9 .

‘Canadian Place, Toronto, Ont. . |

Me

Le Weaindls

For more information, write to.
Doug Smith, Chairman, Canadian.

Bor 122, Suite 3700, First —

ENCOME. TAX PLANNING ~

CARLYLE SHEPHERD & CO.

.., CHARTERED ACCOUNTANTS

“INCOME TAX RETURNS PREPARED

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