The Terrace Standard, Wednesday, January 29, 1997 - A7 Whai to put into your RRSP __ People are constantly asking me the kind of investments they should be putting inside their RRSPs, In today’s low interest rate environment, it really doesn’t make a difference. ‘The exact same investment you have outside your RASP can be put - inside your RASP. ’ That was not always the case. investment strategies in the 1960s called for putting interest-bearing investments inside your RRSP— because outside the interest would be fully taxable—and dividend-pay- ing investments outside in order to take full advantage of the dividend tax credit or capital gains deduction. This theory worked well as long as interest rates were high. Today these yields are.no longer there--so com- pare the yield on your fixed-income investments with the dividend tax credit and capital gains available on ‘equity investments, ' Term deposits that feturn 6 per cent a year will double your money every 12 years. A qual- SOU A Sg 2 SE hs ne tes ity mutual fund shold a cs ee ee double in value every . a PE ee four or five years. el Eg ey ky Ee A 40-year-old, for en oe ee Scotia's 2-Year Stock-Indexed GIC. With a rate of return tied to the performance of the Full amount of principal Toronto 35 Index”, it offers Increases by 0 - 20% Principal + actual % increase you the potential for stock Increases by more than 20% | Principal + 20% market gains with the security of a GIC. Find out more about this safe way to earn potentially greater returns. Drop in or call us at 1-800-387-6507. Shows a negative return aoa Lakelse Avenue, ~ = | Seateanie ® Terrace, B.C. 635-2261 | The Bank of Nova Scatia, Montreal Thast Company and Montreal Trust Comy any of Canada r reserve “the hit 1 ithd this offer at any time, ™The "Toronto'35 Index" is a trade-mark of The Toronto Stock Exchange ve the ih oil de a and all rights are reserved. The Exchange is not associated with this product and use of the trade-mark does not constitute - endorsement of the product by the Exchange, "Registered Trade- mark of The-Bank of Nova Scotia.” “wnwscotiabank.ca _ a example, who has $10,000 in interest- bearing investments inside his/her RRSP will have $20,000 at age 52 and $40,000 by age 64, The same person who invests $10,000 in a mutual fund which doubles every five years will have $20,000 by age 45, frst $40,000 by age 50, {‘} > $80,000 by age 55, $160,000 by age 60 and $320,000 by age 65. Even at a cursory glance it's pretty clear—put mutual- funds inside your RRSP, dividends and ail, if the yield is sub- stantially higher than what you can earn on Interest-paying investments. ' At the same time, never reverse the 1950s stratecy. “ever put interest- bearing investments outside your RRSP. Stocks. and mutual funds are find, howev- er, as long as they offer a-higher return, for example, than GICs. The old argument also goes that if you forego that dividend tax credit and capital gains deduction by putting these investments inside your RRSP, Tea SP SLE det Research shows that only one person in twenty is actually in a financial post- tion to afford to retire in the manner that they had imagined. The key is to start invest- ing in an RRSP as soon as _ possible. . An RRSP is a long term investment. Just waiting one more year to open an RRSP can make a tremendous dif- ference over time. | Interest multiplies over you !l pay higher taxes when the money is time. win eraWn en Le y Don't wait until it’s too Just so, Even if you A: . 8 sal collapse the enmre : , late. Open an RRSP today. .. RRSP and have to pay tax on the entire $320,000, you'll still have $160,000 at the end of the day. That's four times what fixed income investments would return during the same : Lge a a period. Even then, after . mo collapsing your cite’: | ‘Terrace & District Credit U wind up with only — errace 18 ric re | nion - $20,000 after taxes. oT. ‘(In my books, ES _ 4650 Lazelle Avenue,Terrace ph, 635-7282 $160,000 is a lot better Nae | We belong to-you.” change with the times. Otherwise, you're not t t - going to have the stan. the credit union advantage: we are a profit sharing, member owned institution... to have In retirement, we belong to you.