Business Z j TheReview Wednesday, March 13,1991 — D4 Financial advice for contest winner I was impressed. This couple had been married 27 years and had three teen-aged children. Now, at age 47, mum and dad were run- ning their own business and had a. net worth of $700,000. “Tn about three years, we plan to sell the business and retire — or at least semi-retire,” said Don Fisher when he entered this column’s contest for free financial advice from the Canadian Association of Financial Planners. Added Joan: “When we review our investments, it looks like we have too many things — GICs, stocks (both blue chip and penny), mutual funds, gold coins, junk silver coins, silver certificates, three lots and a half-interest in a fourth. “They all seemed like the nght things to buy at the time except for the penny stocks: we paid $41,668 for them and they are worth only $7,612 today.” Of the 454 entries, the Fishers (not their real name) were among the five winners chosen for review by eight groups of eight to 10 planners at a CAFP Pacific Chap- ter planning school. “We always thought the three lots could go toward the children’s further education if needed,” said Don. “Otherwise, they could per- haps build houses on them in the future.” Because the Fishers have worked all their lives in their own business, they have no pension but have built up their own RRSPs: $108,000 for Don and $77,000 for Joan. “Up until 1987 I was after growth in our RRSPs,”’ said Joan. “But after the crash I woke up to What safety means. We are now gradually converting all our RRSPs to GICs, bonds, income funds and cash.” The Fishers hold a variety of mutual funds and mostly blue chip stocks. “We are selling off our junk stocks as they recover,” Joan said. “The ones we still have remind me not to buy any more!” Added Don: “At the moment we have about $77,000 in cash outside the RRSP which we want to use to take advantage of lower prices in the stock market during the slow- down.” The Fishers have a $29,000 13.5-per-cent one-year open mort- gage on their home, which will be paid off in 15 years. Proceeds from the sale of the business will go into interest-bearing deposits. “But we are not sure about the market, interest rates, inflation, land values, the economy — things we have no control over,” said You’re worth a lot more than ‘ you think. Call me today to find out how Investors can help you start building your financial furure CALL ERIC HURWOOD 388-4234 Investors $= Group Building tutures since 1940. _- '_734 BROUGHTON ST. Joan. “Sometimes I think we are doing the wrong things, like on Oct. 19, 1987, and Oct. 13, 1989. “It seems like everyone has a different idea as to what a port- folio should have in it, as well as the amounts.” The financial planners at the ‘CAFP seminar reviewed the Fishers’ situation and congratu- lated the couple on having done so well financially. “Although your investment portfolio is quite complex with a large number of holdings, some fine tuning should allow you to enjoy your retirement with secur- ity and dignity,” said the report provided to the Fishers. Key suggestions: — Consoli- date, restructure and simplify the investments. Develop a plan, pos- sibly with the help of an invest- ment counselor, to provide a clearer focus. Inflation can do considerable damage to guaranteed investments over the years, so consider keeping some growth-oriented securities. But hold them outside the RRSP to take advantage of the capital gains exemption and dividend tax credit. Get expert advice on the penny stocks to see if they are ever likely to climb back to their original values. — Use liquid assets to pay off the mortgage now as the interest costs are not deductible. — Consider setting up a trust for the children. Transfer the prop- erties into the trust so future growth will be attributed to the children. — Pay the children to work in _the family business. This will save tax because such payments are deductible. The children will prob- ably pay tax. They can then use these before-tax funds to pay their own expenses now or in the future if they go to college. — Don should make maximum contributions to a spousal RRSP for Joan as long as he has earned income, to equalize future incomes. Do this at the beginning of each tax year. — After retirement, spend non- RRSP funds first. Seek advice on the best way(s) to provide regular income. Leave RRSPs to grow tax-free as long as the money is not needed. — Rather than selling the busi- ness, consider hiring somebody to tun it. This could provide an alternate source of retirement income. And if the value of the business grows, this could provide another hedge against inflation. Noting that the Fishers had not reviewed their wills since 1978, the financial planners said: “Updating your wills should be a top pnority.” PATOS ISLAND = Continued from Page D3 “Skippers and crews will face the challenge of winds, tides, navi- gational hazards, currents, and shipping traffic as they make their way form Sidney to Oak Bay and out to round Patos Island,” Rhodes said. Many celebrated racing yachts from the Peninsula are expected to take part in the event, which will be one of the highlights of the 10th anniversary of the SNSYC. ~ Well-known entries such as Madeline, Gumboot, Bongo, 12- Seasons, Pegasus and Black Ice, will no doubt be there, as well as Many promising newcomers,”’ Rhodes said. STRAIGHT TALK | 5 ABOUT YOUR MONEY. 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 meme = | LEU ete [fen fren er [Aor ent p= 2 5 E 15 CAPITAL CONSULTANTS LTD. 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