Should | have a self-directed RSP2

(NC}-For many years, the conventional wisdom was that self-directed plans were for sophisticated ‘investors who actively man: aged their financial affairs. The confusion ‘stemmed from the very-name*“self- directed,” which implies that you have to’ make’ all the decisions. But the real-

ity is that managing ‘a self-.

directed RSP is no different than'managing any other RSP. When all-is said and done, regardless. of the type of plan you choose, you are responsible: for managing your savings and you can make that process as: simple -. or as complicated - as you want. - Let's. start by looking -at whether self-directed: plans are more complicated to manage than other plans. When you open an RSP, you could open a plan with a mutual tund company and invest in a variety of unds ranging from money market funds ta a small cap Asian fund, Or, conversely, you could open a self:

“directed RSP and put all

you money inio one bal- anced mutual fund.” If this were the case, you would probably find your self- directed plan simpler to track: and manage than

~ your other plan! °

Many people also believe

. that a self-directed plan is riskier. The truth is that risk

is dependent on what type

of investments you hald in

-and child support pay “ments; ‘royalties fr

your plan, not what type of plan it is. A GIC is always a safe investment, whether you hold it in a self- directed-plan or not. But if

‘RSP Questions and

Answers (NC)-Here are answers to some commonly asked questions about registered retirement savings plans. Remember, your personal banker is another great source for information about RSPs.

-Q: What is the best time fo start an RSP or to con- tribute to an RSP2 A: The best time to start or to contribute is as soon as you have earned income, and as early as possible in the current tax year. Ta make the most of your RSP advantages, you should contribute as early as possible each year. ~Q: When is the annual ‘contribution deadline? - A: To be eligible for an

_ RSP deduction in a specific

fax year, contributions can

be made any time during - ihe year, and up to 60 days into the following

year. The deadline for the

1998 lax year is March 1,

1999.

Q: What type of income is eligible when | calculate my maximum RSP contri- bution this year?

A: The key component for

_mast Canadians is salary -

the gross amount minus union or professional dues and claimed employment expense. BUT before deductions for income lax,

-unemployment ‘insurance -and. the Canada or

Quebec pension plans, which are withheld by yaur employer. If you're self-employed or the part- ner ‘in a firm, earned income is the income fram carrying on the business. Other sources include tax- able alimony, maintenance

om works. or-inventions that

- are created, net real estate

rental: income, disability

~ pension income fram the

CPP.-or. QPP, research

gratuities” =. oes News Canada

‘grants. and tips and

you choose a more volatile ‘investment, such as a pre- cious metal mutual fund, the degree of risk is with the fund itself, not the type of plan you're holding it in.

So; why choose a self- directed’ RSR? -A ‘self: directed plan allows you to hold ‘any eligible invest- ments inside one single RSP. IF you open an RSP with a mutual fund com- pany, you can only pur- chase that company’s mutual funds for your RSP, So, if you want to own funds’ from different com- panies, you would have to

_apen-a plan with each - or Pp p

you could open a self directed plan which allows you fo purchase funds from several companies within the same plan. A self-

directed plan in this instance, would simplify”

managing your retirement savings.

Another reason people choose fo open a. self- directed plan is that it can make it easier to take advantage of the 20% for- eign content rule and invest oulside of Canada. First,

the rule is that you can invest up to 20% of book value of each plan in inter- national investments. If you have several plans, 20% may not add up to enough funds to justify your pur- chase. It will also compli- cate. managing your plans even more, A self-directed plan also gives you access to a wider range of foreign investments.

Retirement income funds - plan ahead (NC)—IF you were born in 1930, it’s not too early to start thinking about converting your RSP to a retirement income plan.

By law, you must wind up your RSP by December 31, 1999, the year in which you turn age 49.

We recommend not waiting until the last minute to act, The move fram an RSP to a RIF, annuity, or a combination of the two is one of the most important financial decision of your life. It will likely require a change in your invest- ment strategy, since the focus of your plan will switch form growth to income and capital preservation.

Here are three tips that will ensure your retirement income option works to your best advantage.

1. IF you open a RIF and your spouse is younger than you, base the annual minimum withdrawal on his/her age for maximum flexibility,

2. IF you have earned income, you're allowed to make an RSP contribution in the year you wind up yaur plan, but it must be done by December 31, 1999.

3 You don’t have to start receiving income from your RIF until the year after it is set up, in this case year 2000.

- News Canada

One final reason people choose self-directed plans is that it allows them to choose from the full range of RSP investments, allow-

and greater growth poten-

example, can only be pur- chased. through a self directed plan,

- News Canada

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What fees are charged on an RRSP?

You should be aware that there may be fees associated with your RRSP. Feesmay be charged to your RRSP when you maka a withdrawal, when you close yourRRSP, or transfer the funds to a different RRSP issuer. These fees rangefrom as low as $25 to as

As well, trusteed RRSPs have an annual administration fee, and may havetransae- tion fees, These are not tax deductible.

Mutual fund RRSPs charge monagement expenses, and you may also pay afront-end or back-end (deferred sales charge) load

room accumulated after

indefinitely? If not, we

Have you taken full advantage of the maximum

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1990 can be carried forward

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Call today for your appointment

Terrace Kitimat

635-8505 692-6191

Smithers 847-2689

Credential Asset Management tic, the distributor of Ethical Funds, is a subsidiary of Credit Uniun Central of _ Canada. The simplified prospectus conlains important information which we encourage you to réad carclully - hefore investing. Obtain.a copy from yaur credit union of investment advisor. Unit values and returns will jluctiate: Mitual fund investments are nat insured nor guaranteed: The historical annual compounded total returns include changes in unit Values and reinvestment of distributions for the period ended Wecember 31,1998, but assume no optional charges payable by the unithalder which would have reduced returns. Past performance tlaes not guarantee future similar reurras. *RRSPs are restricted toa foreign content limit of 20%.

Have you ever thought about the number of paycheques you'll receive before you retira? If you haven't, here’s a sobering thought; a 25-year old who plans to retira at age 65 has 960 paydays left. A 45 year old has only 480, Assuming that you will receive 24 paycheques a year for the rast af your working life, haw many do you have lef?

Now consider haw much you save from each paycheque towards your retirement. For many Canadians, a paycheque barely slretches over the two week pay periad. The fact is, most of us have limited lime and resources befare we retire. But it's important to remember that we may have another 30 years after retirement. That challenge Is to bridge the gap between how much we can put aside for retitement and how much we'll actually need, , There are three ways you can bridge the gap: by saving more, by working longer or by choosing growth investments. Saving more is a good idea, but it isn't always possible, especially if you're paying a mortgage or raising children, Depending on your job, working aftar 65 may nat be possible. In any event, it's difficult {tell now how you'll fee! about working when your 65, And even if you do work longer, it’s better to work by choice than because of financial needs. a That leaves growth investments: Putting at least some of your money In the stock markat, - where there's potential far greater returns, returns that can out paca - inflation. Many people ~are intimidated by the complexities of tha slack market, Thay ara more comfortabla with another, easier way {o invest: Equity mutual funds, which offer professional money management and diversification. Historically, well-managed equity funds have outparformed other

types of investments over the lang term, In addition, there are a variaty of mutual funds available, which give you an opportunity to choose funds that match your risk tolerance and time horizon. In most cases people earn a finite number of

Personal Financial Analyst Primerica Financial Services In Terrace

Paycheques. So i! saving more or working longer aren't options for you, you'll have to make your Savings work harder. That meang starting early with a regular investmant program so your money has a longer time to grow. if also means looking at financial vehicles [ke equities and equity mutual funds because they offer the best Opportunity for growth over time,

The earlier you invest in equity mutual: funds, the mora growth potential your money will have, For. example, iffat age 25, you invest $2,000 per year (at the beginning of each year ) for 10-years and then

Start counting your paycheques

Stop investing, at 10 per cant return you'll have over 610,000 at age 95. But if you wait until you're 35 and invest $2,000 for the next 30 years, you'll have about $360,000. Tha's a loss of $250,000.

By taking the time now to find the best long-term consistent return, you can improve your financial future significantly, Even one percentage point can make dramatic differance over time. If, at the beginning of each year, you place $5,000 in an investment that earns eight per ceni over 30 years, rather than one thal earns nine per cent, you lose out over $131,000.

There are three things you can do wilh your paycheques: spend it, lend it or invest it, Before you spend another paycheque, think about how many you have left,

Please feel free to contact me with any questions or comments al;

635-7800 or 1-800-295-7676 arcadipfs@kermode.net

Your unit value and invastment return will Huctuale, Importent information about any mutual fund: is contained in its simplified prospectus. Read your prospectus carefully befora investing.”

Age Years Before Retirement - Number Of Cheques Bo AQ 30. 38 840 35 30 720 40 “95. 600 45 20 A80 50 15. 360 55 10 240