Wl business jaa BS - Sunday, June 3, 1984 - North Shore News Playing the RRSP game OLDING the mortgage on your own Self- _apraisal, administration fees, _ plans. tax. That is, because you are chase dividend-paying stocks Directed RRSP, as we suggested in last et. Some of them are start-up Careful study of the con- _— substituting one asset — cash outside the RRSP you now week’s column. could be a winner for Or one-time costs, others are cept gives rise to some — for another asset — a_ get the tax benefits of divi- . i continuing, annual costs. fascinating ideas and _ mortgage. dend income and capital some investors. Today we explore some other Stressing that these are angles — both good and bad — about this new in- vestment concept. Generally speaking, the idea can be employed in three ways: to pay off an existing mortgage on a house or con- do; to buy a house and use funds in an RRSP to finance either the first or second mor- tgage; or, if the mortgage on your house has b paid off, to get funds.déut of your RRSP for whatever invest- ment or other use you have in mind by again mortgaging the house. In order to win, the simplest test is to make sure that the mortgage rate of in- terest you will pay into your SDRRSP is perhaps two percentage points or more than what the money in your RRSP is now earning. As we pointed out last week, everyone’s situation is dif- ferent, so you must make the appropriate calculations to Bill Ryan North Shore News. This type m a great many marriages help and guidance. In this 4480 Oak Street determine wheather the con- [<_< of straight forward common and other personal regard, financial writers like Vancouver, B.C. cept can benefit you — andin forget to include ALL the — sense is more necessary now _ relationships. yourself, with access to the V6H 34 your calculations don’t costs. These include legal, than in living memory. The onset of the recessitr media, can make a very real figetat. HYDRO towers are thrown into stark rellef by the evening generalizations, here is what you might face: Over a 20-year term these subsidiary fees might run to an average of about one percent of your mortgage per year. On a $20,000 mortgage, in the start-up year these fees might be in the order of $1,000, and in each subsequent year perhaps $275 or $300. Yorkshire Trust, National Trust, and McLeod Young Weir are among the com- panies which offer SDR- RSPandmortgageinvestment possibilities, especially if you structure your plan to fit your particular need or goal. For example, if the mor- tgage is taken out on a rental property, or one that earns you income, you are paying yourself the mortgage in- terest and the interest is tax deductible — and so are some of the fees! If you take out a mortgage on your mortgage-fee house, to get money for investment or other purposes, you are taking the money out of the RRSP without paying income Another idea (and 1 am far from the first to suggest it): If you have dividend-paying stocks in your present RRSP you are losing out on both the dividend tax credit and Capital gains tax advantage. You could convert the stocks to cash (sell them) and take out a mortgage on your house if it is now mortgage- free. This, the experts suggest, achieves two things: First, you get a high interest mor- tgage in your RRSP; second, by using the funds to pur- Straighforward advice Dear Mr. Ryan: Frank you for your ex- cellent article in the May 20, SRI tare -- see HAN a a8 sv a, SWS 4, i, eS + Sow ow, t. ~~, voy F.9 ¢ [eee NEWS photo Stuan Davia NO yp wa Lack of realistic financial planning and = disciplined money management has, of course, always caused havoc a m- VAT: =. wooed 2 DMORG oT i ery aN 6: a wis 7¢ . oar ami _._ has, however, served to magnify these problems con- siderably. As a result, many families and individuals need contribution lives. Please keep up the good work. to people’s David J. Gowmon, C.L.U. Gowman & Company In- surance Consultants gains. Sophisticated investors no doubt will have a stimulating experience working Out varia- tions of this new investment theme. If you have an idea about it _— oF a question — write me care of the News. (We can’t acknowledge all letters, but we will discuss those of par- ticular interest in future columns). Become a Friend of BC's Children's Hospital. Pléase write to us at— atl’, SKNe ANNUITIES?? on the North Shore it’s: Bert Wickham & Associates Ltd. See our ad on Page? 926-3639 BTIC Enroll Today ! 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