> Business\ News TheReview Wednesday, May 2,1990 — B9 The question: To pay off or to save up Should you pay up your RRSP or pay down your mortgage? “My wite and I are thinking about taking out a mortgage to buy a home,” writes S.K. “Should we then pay off the mortgage year by yeat and contribute to RRSPs, or forget the RRSPs, and pay off the mortgage faster?” That is one of the most fre- quently asked questions these days. The answer can vary and depends on both your present Situation and your plans for the future. Several computer programs have been developed to show which choice makes more sense finan- cially. But you can get a reasona- bly good indication in a less structured way. DirecTrust, a division of Coun- sel Trust, has prepared a one-page the RRSP approach would be bet- ter for you. — Are you (and your partner) in one of the two higher tax brackets now? — Can you eam a’ decent rate of retumm on your RRSP — close to or perhaps even more than the mort- gage interest rate? Let’s take a closer look at some of the preceding questions. The higher your tax bracket now, the more tax you will save when you contribute to an RRSP. Ideally, you could then also invest your tax Savings to produce even more investment growth. Conversely, if you are in the lowest tax bracket, with taxable income below about $28,000 for the year, the tax savings of the lower tax bracket when the funds come out than you are when the funds go in, Theories and computer projec- tions are fine. But you must fact the realities of the way you manage and save money. Whichever route you choose, make sure you will indeed be able to follow through. A second best approach that you Stay with is better than a best choice you don’t follow. ‘Many people pay off a morigage because they feel better about getting ouf of debt — even though the RRSP route might be more profitable.’ RRSP approach diminish substan- Many people pay off a mortgage Author asks council to fund history book Sidney was once the home of the “saltwater people” and later became an area where local pro- spectors succumbed to gold fever. And children’s book author Joan Neudecker is proposing a written history be published to mark the 1991 centennial’ of Sid- ney first being surveyed as a town Site. Neudecker asked Sidney coun- cil to put up $3,500 towards the cost of publishing a history of Sidney. Porthole Press has already agreed to publish the book if its © $3,500 investment is met by the town council. The book could be completed analysis which deals with this 5 : tially. because they feel better about by October and in local book question. It provides four simple ae a oe eave yous anon An The relative rates of return are getting out of debt — even though Stores by May 1991, Neudecker guidelines plus two detailed exam- € RRSP for a long time? important. the RRSP route might be more Said. ples with calculations which illu- Strate what happens when one follows the mortgage paydown or the RRSP route. — Might you be in a lower (or the same) tax bracket when you take out your RRSP funds? — Are you more likely to make regular RRSP contributions than If your mortgage is costing you 11 per cent and you can get at least that return on your RRSP funds, you'd lean toward the RRSP. But if profitable. You should be aware of your feelings but also check any costs involved so you decide only after examining both the personal and financial sides. Seeesce seeeeees=seeen=ss, ...JUSt Where will you find 1 : a t i have a 13.5-per- H a = eee : ms See to have the discipline to keep aside a are ae TS ae = 6 su ne r H analysis. Phone toll-free 24 hours Stings to pay down the mortgage? contribution the best return you Mike Grenby is a Vancouver- ' el J G A, relief?. ; a day to 1-800-668-7283. au Bo you feel comfortable with can get 1S only around 10 per cent, based columnist and independent ; @ ERS) 10 POINT 4 Up to 15 people are available to geo es paying down the mortgage might Personal financial adviser; he will a S 6 VA Spy ~ AIR : Pp DECOR, : The more yes answers yOu be better — at least in the short answer your questions as space 4 H aes he phones (Dupe rast have, the more likely it is you ‘enn allows in his column — write to ° CONDITIONING: calls itself “Canada’s telephone shold choose the RRSP route. : ; - trust service”), but if you have any : The longer you leave your him clo The Review, Box 2070, 4 TUNE 1 1 ae h ere Of course, you could also decide money in an RRSP, the more Sidney, B.C., VSL 385. ; UP ! trouble ae aoe ae ©_-) to contribute to an RRSP. then use money magic the tax-free com- a i Kathleen ae a es eat Sore your tax refund to pay down the pounding can produce. A H i SALE ‘ Se ae oe Sanco mortgage. And if the proposed If you expect to be in a lower tax OF NX bring in thist M5C 2C5 Z : RRSP changes go through, starting —_ bracket when you withdraw your CAREER (i) : tycoupon for 4 : in 1991 you could pay down the RRSP funds, you increase the tax IN ; You can also answer the follow- Fifteen swimmers proved their stroking skills over the winter by swimming to their favorite San the challenge. REG a cantar (cnc 2 ITV ITD Jiao ase Gul Sard =Orelsagin — emaawra Reasse som 1550 Jen and aside mirror smashed on a Hee eee at a time, without leaving the lengths to equal the distance to white Honda Prelude that was 656-5584 Panorama Leisure Centre. pool. During the six-month challenge, swimmers completed the required number of lengths to reach loca- tions ranging from Sidney Spit, 7.5 kilometres away, to West Point, Whidbey Island, 125.5 kilometres away. Roman Weszycki, Ian Humph- tey, Dennis Larson and Doug Mabee completed the 5,060 lengths required for an imaginary journey to West Point. mortgage, then make catchup Spring Island as their goal, swim- ming 2,160 lengths to complete Roche Harbor in the San Juan Islands. Janet Clarke completed the dis- tance to Beaver Point, Salt Spring Island, by swimming 1,110 lengths. Jos de Bruin and Fraser Lott each swam 300 lengths, the equiv- alent of swimming to Sidney Spit. The incentive program, designed to encourage regular swimmers at the pool, attracted 24 participants. advantage. This would also apply Vehicle break-ins parked overnight at the Victoria Airport Travelodge overnight April 14-15, Sidney RCMP said. And a liquor dispenser, tools and miscellaneous items were taken from a blue 1976 Ford pick-up that was parked in the 2200-block Beacon Avenue over the April 7-9 weekend, Sidney RCMP said. Persons with knowledge of these crimes are asked to call Sidney RCMP or Crimestoppers. REAL ESTATE fl ™ ing questions to help you choose RRSP contributions up to seven if you contribute to a spousal 5 H off @ whether the mortease paydown or - : 5 Have you ever considered a a 5 ir a ee ss ge Paydow 2 8 Eee RRSP and your spouse will be in a career in real estate sales? Why a Condit Sning a a E not explore the opportunities? : 10 point! S We offer some of the most excit- a Tune Up! WI mM ze Dower Ue S ing, successful marketing tools Hoa 4 and programs in our industry and 12A® 8 ongoing training that is second to —s ) Gulf Island tours = : | : } Sound interesting? For com- plete details call today. BERNIE WILKINSON 13.27% INVESTORS INFO SERVICE O Term Deposits OR.R.S.P. O Mutual Fund Brokers © Tax Deduction Planning © Education Savings Plans © Group Benefit Programs © Increase Business Account Interest by 3 to 5% 9 Please send information on subjects checked above. EXPIRES MAY 30th, 90 RRSP Annualized Yield T-BILL Rate Subject FUND To Change OT-Bill Savings Accounts OR.R.I.F. & Annuities Michael Lines swam the equiva- ; ; lent distance to Pt. Migley on j Name. Phone oft Lummi Island, finishing 4,080 Cigareties stolen = 8 lengths. A window was broken and an g “7S Forel ote : Hick Toll chose swum te | 9 OVERESTERS | unknown quantity of cigarettes GARY L. SHILLINGTON & ASSOC. ! 3,600 lengths equivalent to reach- | 47 ANONYMOUS | was taken from the Tsarllip band 9 2442 BEACON AVENUE, SIDNEY, B.C. V8L 1X6 ! ing Rosario on Orcas Island. You are not alone. If you've lost office sometime before 4:30 am. 0 604-656-8807 5 For Bob Gartside and Jo Pepper, control of your eating try OA. Sunday, Sidney RCMP said. Gi ee re ee en the challenge was 2,800 lengths, equal to the distance to Friday Harbor in the San Juan Islands. East Point, Saturna Island, was Kevin McCullough’s destination, 2,400 lengths away. Weekly meetings offer support and understanding. 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