NORTH SHORE News carrier Robert McLachlan is tearning 39 ~ Wednesday, December 9, 1987 ~ North Shore News FINANCIAL PLANNING about saving and investing ear- ly. The 13-year-old carrier has invested some of his paper ear- nings in a Walkman and a $500 savings certificate. NEWS photo Tom Burley Never too young to invest wisely ROBERT McLACHLAN has decided it’s time to turn his ._paper profits into real profits. The 13-year-old Collingwood Grade 8 student, a North Shore News carrier who lives on East St. James in North Vancouver, has just graduated from the world of spending into the world of saving. Alcng the way he learned some very valuable lessons about spen- ding and saving money. He has discovered that: « “Out of sight, out of mind” in the financial world means your. savings stay saved. e When you do spend, a little forethought increases the value you get for your money. * An emergency fund produces peace of mind, one of the few tax-free profits left. But perhaps the most useful lesson Robert has learned is this: research pays while trial-and-error can cost. “*] have earned $500 by deliver- ing the North Shore News,” Robert wrote to me recently. **] should like to put away this money until | am 18. Can you please suggest the best way for me to invest it?’’ . A financial adviser must look at the whole personal as well as fi- nancial picture, so I had a chat with Robert. “‘A couple of years ago, I’d sav- ed up $500 from my paper route,” he said. ‘‘But I blew it, just spen- ding the money on ali sorts of things. “T got this rocket for $40. But I used it only three times. It crashed and got sort of broken up. And it was costing me $3 each shot for wadding and other stuff.’’ Robert admitted his parents had said the rocket would not be a wise purchase. “1 guess [ just had to buy it and find out for myself,’’ he said. Robert also bought a Walkman for $100. ‘‘That was a good thing,’’ he said. ‘‘I always listen to it when I do my papers.”’ This time, when Robert had saved up another $500, he decided (with a little encouragement from his parents) to look into the possi- bility of saving the money. “*] did think about spending it,’’ he said. ‘It’s hard to save when you see something on the shelf you want.’? Robert said his mother suggested he write to me as the first step to find the best approach. “I wanted to find a way to in- vest the $500 so it would grow and I'd get a lot back later,’’ he said. “And that way I’d also have the money then if I needed it.” 1 suggested Robert and perhaps his mum do some shopping around by phone, contacting several fi- nancial institutions including those with special accounts and other savings instruments for children. dollars and sense y by Mike Grenby “You should decide whether you want to be able to get your money at any time, or whether you are prepared to lock it up for a period — and if so, how long,’’ I told Robert. ‘Usually, the longer you can commit your savings, the more you will earn. ‘Some financial institutions allow children a lower minimum deposit for savings certificates. “If this approach appeals to _ : you, you might divide your $500 into five certificates ranging from one to five years. “If rates rise, you will be able to reinvest some of your money at 2 higher rate. But if rates stay the same or fall, at least some of your money will still be earning today’s high rate.”’ Canada Savings Bonds were also on sale at the time, so 1 pointed out their advantages and disadvan- tages. Robert’s mother, Trish McLachlan, did some phoning around. ‘‘I wrote down ali the in- formation and then discussed it with Robert,’’ she said. In the end, Robert decided to invest his $500 in a five-year sav- ings certificate paying 10.25 per cent — “the highest we could find,”? Mrs. McLachlan said. With the interest also earning 10,25 per cent (not all financial in- stitutions compound at the original | rate — some pay only the savings account rate on the interest — so always ask), Robert’s $500 will grow to $814.45 in five years. Robert said he realized the money was locked in ‘‘but then f can’t be tempted to spend it. I felt the savings bonds would make the money available too easily. “I’m still earning about $30 to $50 a month and that can be my spending money. 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