Business

TheReview

Wednesday, March 7, 1990 — A20

How the experts do it

1 always enjoy asking financial
experts how they manage their
own finances.

This time, I posed the question
to Mike Mallin. The co-author of
Preparing Your Income Tax
Returns (CCH Canadian, $16.95),
he’s been giving this column’s
readers some money management
and tax ups over the past two
wecks.

Originally from

- Washington, D.C., and Chicago
(where he received his law deg-
rec), Mallin scttled in Toronto
editing a tax reporting service for
CCH Canadian Limited.

“T felt perfectly qualified for the
job,” he said. “Tax was my worst
subject in law school and, of
course, I knew nothing whatsocyer
about Canadian tax. So I started
with a clear mind and no prior
misconceptions.”

In 1978, working with Arthur
Anderson & Co., chartered
accountants, Mallin began editing
Preparing Your Income Tax
Returns, an annual publication.

He eventually went out on his
own, and now co-authors the book
as well as working out of his
home as a consultant to small
accounting firms.

Mallin is 47, married to Car-
men, 43; their daughter Kate is
three and she figures prominently
in the family’s financial planning,
as we'll sce in a moment.

“When I could afford to save, I
Started to pul money into mutual
funds in an RRSP.” said Mallin.
“But I didn’t pay enough attention
to load factors. The first funds I
chose had very high front-end
loads — probably because the
salesman did a good job. But |
learned my lesson.

“T sull make maximum RRSP
contributions and still mvest in
mutual funds because they sccm to
me to put the onus of investment
decisions into professional hands
at a fairly reasonable cost.”

Mallin believes in patronizing a
banking institution that offers a
good decal.

“T happen to live half a block
from a Province of Ontario savings
office,” he said. “I used to walk
past the place for years to deal
with the bank where I’d always
done business.

~The bank had just done some-
thing annoying, changing the rules
about licred savings accounts. So I
walked into the Ontario savings
office where I could get much
better rates and lower service
charges on a savings account.

“It can certainly pay to shop
around.”

Mallin has set up a trust for
daughter Kate, which makes her
the common sharcholder in his
company. “If my own tax planning
works correctly, she will accumu-
late cnough income al a net 22-
per-cent tax rate to provide for her
college education or other inter-
ests,” said Mallin.

“Other than maximizing my
RRSPs, which are mostly in equit-
ics, and having some common
shares and a cushion of short-term
deposits, that’s all the retirement
planning I’m doing. I’m not in a
business where I ever have to
retire; | don’t think of providing
for my old age.”

Small-town Good Samaritans

SUSAN VINCENT needs no
more convincing that there arc
benefits to shopping in a small
town. The Victoria resident lost
her keys during a recent excursion
to Sidney — on a rainy, cold day.
She waited at a local hardware
store for Ray’s Locksmith to
arrive, and eventually tracked
down her keys after the person
who found them phoned her hus-

band. By the time the errant keys
showed up, Vincent had been
amply impressed with small-town
hospitality.
* *K OX

IN CASE YOU were wondering,
the top two complaint generators
at the Better Business Bureau of
Victoria in 1989 were mail-order
magazine offers and other mail-
order companies.

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Mallin said psychological barri-
ers offen get in the way of effective
tax planning.

__ For example, people invest in
RESPs (registered education sav-
ings plans) — the ones that pay off
only if the child continues to
higher education — because they
want their kids to go to college,”
he said.

“Even a family allowance sav-
ings account is more flexible and
simpler — if people would only
recognize their kids might not go
to college.

There might be better things
they could do financially — or
even personally. For example, it
might cven be better to spend an
hour a day with the kid rather than
setting aside an hour’s wages to
put into an RESP.”

I felt perfectly
qualified for the job.
Tax was my worst
subject in law school
and, of course, | knew
nothing whatsoever
about Canadian tax.
So | started with a
clear mind and no
prior misconceptions’

-Mike Mallin,

LOVE

Well here it is birthday time,
and just think you're still 39!

HAPPY
BIRTHDAY

%

Mallin sull has a personal mort-
gage on his home, borrowed from
his mother so the moncy stays in
the family:

“If parents can afford to lend
money and forego the interest,
that’s a good deal because they
avoid paying tax. The children can
then repay the capital if it’s
required.”

Mallin said he’s very risk averse
and debt shy, “which is probably
why Ill never be rich. Pll invest in
the stock market, but not in high-
risk companies.”

. ~ By Echo Eburne

NAS

FACT, FACTS AND MORE FACTS

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