#

>

b

|

$s

*

cS

ve

Business

TheReview Wednesday, October 24, 11990 — B5

A number of options at CSB time

It’s that Canada Savings Bonds
time of the year again. If you have
= Of are thinking about buying —

SCSBs, review the following check-

list and circle the relevant points.
ADVANTAGES: Signing up for
the CSB payroll savings plan at
work is one of the best ways to
force yourself to save money.
“B.C, has the highest participa-
tion in payroll savings — 117,000
people at 1,350 companies last
Y@pt,” said Bob Sutherland, direc-
tor of the program for B.C. and the
Yukon, and vice-president and
director of Odlum Brown Limited.
“And employees have until Nov.
15 to sign up, two weeks after the
Nov. 1 deadline for cash pur-
chases.”
Note: because you borrow to
buy the bond, then pay off the loan

_ over the year, remember to deduct —

ihe interest on that loan when you
file your tax return.

CSBs are as safe as the federal
govermment’s backing. And you
may cash the bond at any time,
although you receive no interest in
the first three months of a new
issue if you cash in before Feb. 1.
The 1990 series will have a 12-
year term.

‘Depending on how
interest rates move
affer you buy the T-
bills, you could make
or lose money on their
sale’

The interest rate is competitive
when compared to other safe, flex-
ible deposits. If rates rise over the
year, Ottawa sometimes raises the
CSB rate — as it did this year. If
rates fall, however, you still get the
guaranteed rate until the following
Nov. 1.

CSBs are fine for a short-term
investment, as an emergency
reserve or ready cash for an oppor-
tunity. They are also handy for
children’s family allowance sav-
ings programs.

DISADVANTAGES: As their
name says, CSBs are a savings
instrument, not a true investment.
After tax and inflation, you make
little if any money: 2

Even the famous 1981 issue that
paid 19.5 per cent was a money-
loser for those in the top tax
brackets. After tax, these people
eared about 10 per cent on the
bonds — while inflation was run-
ning around 12 per cent.

ALTERNATIVES: My favorite
is to knock off debts. Why pay up
to 33 per cent on outstanding
credit card accounts or even 11 to
14 per cent on a mortgage when
bonds earn you only around six to
seven per cent after tax?

Contributing to an RRSP Gf you
aren’t already putting in your max-
imum and an RRSP is appropriate
to your financial situation) is often

a better choice than buying a CSB.

That will produce an immediate
tax break of about 27 to 45 per
cent of your contribution. And
money in the RRSP can then
easily earn a guaranteed — and

tax-sheltered — return at least as
high as the CSB rate.

Of course, you can also put
CSBs into an RRSP, claiming a
deduction for the amount contri-
buted.

Many financial institutions offer
deposits which compete directly
with CSBs. These deposits typi-
cally pay about one-quarter of a
per cent more than the CSB rate.
And they are equally redeemable
with little or no penalty.

As long as the deposit (principal
plus interest) is within the limits
provided by Canada Deposit
Insurance Corp. or credit union
insurance, the money should be
just about as safe as CSBs.

Ottawa itself also offers Trea-
sury bills, which generally pay a
higher rate than CSBs,

T-bills, bought through a broker
or bank, are also guaranteed by the
government and can be sold at any
time prior to maturity.

Depending on how interest rates
move after you buy the T-bills, you
could make or lose money on their
sale. Also, if you buy a T-bill for a

Are you
managing your
money or

just managing
to get by?

Call me today to find out
how Investors can help
you start building your
financial future.

CALL Ty ane DOBBIN, B.Ed. 2

388-4234
Investors
Group

Building futures since 1940.
734 Broughton St.

term of less than a year, if rates
drop you would then have to renew
your at a lower rate.

If you are an investor (as
opposed to only a saver), then you
might look beyond CSBs to the
stock market, revenue property or
a business opportunity.

Naturally, you take higher risks.
But you also get a shot at a higher
retum and usually receive better
tax treatment of your profits, too.

Perhaps the answer is to diver-
sify: buy some CSBs (perhaps
through payroll savings) but also
pay off some debts, contribute to
an RRSP, consider longer-term
bonds (in case interest rates fall)
and possibly invest in a (stock
market? real estate?) mutual fund.
If you don’t have enough money to
do everything, review the points
you circled in this checklist to
decide your priorities.

Finally, be sure to redeem all
bonds once they mature, for they
eam no further interest after the
maturity date.

Mike Grenby is a Vancouver-
based columnist and independent
personal financial adviser; he
will answer your questions as
Space allows in his column —
write to him c/o The Review, Box
2070, Sidney, B.C. V8L 3C5.

BETTER RATES THAN €.S.B./’s

e One year special issue
e Insured by CDIC
e Redeemable without penalty
after 60 days

RATE 11.375%

GARY L. SHILLINGTON & ASSOC.
2442 BEACON AVE
SIDNEY, B.C. V8L 1X6

656-8801

LICENSED AFFILIATES:
SEABOARD LIFE INSURANCE COMPANY
VICTORIA ASSET MANAGEMENT, GROUP INC.

STRAIGHT TALK | 5
ABOUT :
YOUR MONEY.

iam

DTT

RD Ne BS 8 RIAA

Getting the most for your investment dollar is as easy as
talking to the right people. For seculy, a higher rate of return
and straight talk call Gurney Smith & Asssociates today. —

GURNEY SMITH & ASSOCIATES LTD.

FINANCIAL CONSULTANTS ¢ LIFE UNDERWRITERS

SUITE 6 - 9843 2nd St, SIDNEY (In Marina Court) 656-2411
1205 € Verdier Ave, (Brentwood Bay Shopping Centre) 652-1482

Just married and
justifiably proud.
Tell the whole
world in our
Happy Ads.

Bring in a picture
of your wedding
and we'll print it
in our Happy Ad
section of the
Classifieds for
only $20.00. Or
double the size of

for only $35.00.

HAPPY ADS

FOR ALL OCCASIONS

your announcement

Our Happy Ad size is one column wide by three inches deep.

Use Happy Ads for other occasions as well.

e Anniversaries e Graduations

CSS) CAPITAL CONSULTANTS LTD.
Personal = Corporate

L,
SS INVESTMENT ADVISORS
>; FINANCIAL PLANNING PAYS —

Complete Investors Service

Including RRSP’S, RRIF’S
Educational & Monihly
Savings Plans

Lee Ann Weigold

Financial Planning

384-8844

or 655-4105 Res.

e Birthdays

The

Sidney &
Saanich
Peninsula

e Announcements

Review

9781 - 2nd St. Sidney V8L 3S5

e Special Events

656-1151