e

22 - Sunday, January 21, 1990 ~ North Shore News

ATEN |
IN AV

Wy nee
¥ ¥ a | ae \& ae

DESIGN A STRATEGY

RRSP spel

RRSP — THOSE feur letters
could well spell profit for you if
you understand this common tax
shelter and the best ways to use it.

“Although registered retirement
savings plans have grown into a
multi-billion-dollar business in
Canada today, many people still
miss out on one of the best in-
vestments the ordinary individual
can make,”’ said a certified general
accountant who has studied the
growth and changes that are taking.
place in the financial side of
retirement planning.

When you contribute to an
RRSP, you deduct your contribu-
tion from income and so save tax.
When you take out your RRSP
funds (ideally, when you are in a
lower tax bracket because you have
retired, taken time off work, etc.),
then you must add this money to

your income for that year.

“But while the money is in the
RRSP, it grows tax-free,’’ the
CGA said. ‘‘And that advantage
can work financial miracles.'’

Let’s say you have $3,500 a year
to invest over the next 20 years and
your money will earn 10 per cent.

Inside an RRSP, your invest-
ments will grow to $200,462. Out-
side the RRSP, you will end up
after 20 years with $108,239 if you
are in the 27 per cent tax bracket,
$75,151 in the 41 per cent tax
bracket and only $65,203 in the 46
per cent tax bracket.

‘Even if you took out all your
RRSP money in one year — which
you would never do — you would
still end up with $108,256 the CGA
said.

“By taking out the money
through a registered retirement in-

come fund, the money still in the
RRIF would continue to grow
tax-free for many more years,
producing an even higher total
return.

“There’s no question that in-
vesting inside an RRSP is always
better than investing outside an
RRSP — if contributions and pre-
tax rates of retura are the same."’

The CGA then summarized the

key points to review when you are
considering an effective RRSP
strategy.
@ What is an RRSP? You may
have a savings account, term de-
posit, mutual fund, mortgage or
one or more of several other in-
vestments in an RRSP.

You may contribute to one of
these RRSP investments, subject to
certain limits.

‘As I said — and these are the

RRSPs:
AN INDEPENDENT
ASSESSMENT.

Nobody tells us which RRSPs to represent. We survey the market and
choose the best.

And with long term consistent returns as our prime criterion, there is no
better choice than Industrial Growth Fund. The record proves it.

Let us show you — independently — what Industrial Growth Fund can
mean to your RRSP. And to your retirement standard of living.
Call or return the coupon below. ,

David Levi .
Vice President Broker Services

C.M. Oliver
668-6700

Industrial Growth Fund's Record — 1 year: 16.2%, 3 years: 13.9%, 5 years: 15.6%, 10 years: 15.6%, 15 years:
17.1%, 20 years: 17.4%, since inception: (22 years) 17.0%. All figures are average annual compound retierns to
November 30, 1989 based on the net amount invested and incheding reinvestment of discributions. Past performance is not
necessarily indicative of future results. Offer made only by prospectus,

——------~----5

Looking both ways.
| To manage your RRSP.
For the long term.

O Please send me more information on an
Industrial Group of Funds RRSP managed by
Mackenzie Financial Corporation.

POSTAL
PROVINCE CODE

PHONE
(Residence) (Business)
MAIL TO:

David Levi Third Floor
Vice President Broker Services 750 West Pender Street

C M Oliver Vancouver, B.C V6C 185

Mackenzie

The Industrial Group of Funds

underlying features of the RRSP
50 they bear repeating — you can
deduct your contribution from
your income, which lowers vour
income tax,’’ said the CGA.

“The money in these RRSP in-
vestments grows tax-free. But
when you take out your RRSP
money, every dollar will be added
to your income the year you
receive the money."’

You may take out your RRSP
money at any time. You must close
out your RRSP by the end of the
year yoo turn 71, but may then
withdraw your funds — and pay
tax on this income — over the fol-
lowing years.
© What are the rules? The rules for
contributing to an RRSP are un-
changed for both 1989 and this
year. You may put up to 20 per
cent of your earned income —
maximum, $7,500 — into a plan
or, if you belong to a pension, 20
per cent of your earned income up
to $3,500 minus any pension con-
tributions you made.

Deadline for contributing for
1989 is March 1. To shelter your
earnings from tax, consider mak-
ing your 1990 contribution as early
this year as possible — instead of
waiting until this time next year.

If your spouse is likely to be in a
lower tax bracket than when the
RRSP money is eventually
withdrawn, you may make your
contributions to a spousal RRSP.
However, ask about the ‘‘three-
year rule’? if your spouse plans to
withdraw the money soon after
you contribute.

You may put money into your
or your spouse’s RRSP up to your
own contribution limit. If you
contribute to a spousal plan, your
spouse may also contribute to his
or her plan up to his/her contribu-
tion limit.

Proposed changes to the RRSP
rules won't affect the regular con-
tribution limits until 1991. But if
these changes are passed, pen-
sioners should consider rolling
over enough of their pensions
(above the normal RRSP contribu-
tion limits) into their own RRSPs
to at least reduce their income to
the lowest tax bracket for 1989.
Under the proposed pension/

CANADA'S
22-YEAR
RRSP
GROWTH
LEADER.

Put the management of Mackenzie
Financial Corporation to work for
your RRSP.
Call
C.E. SECURITIES LIMITED

#802 - 1200 BLIRRARD ST.
VANCOUVER, B.C. V6Z 27
Donn Kadler

or

Harold Johnson 685-0790

Offer made only by prospectus.

Mackenzie

The Industria? Group of Funds

Ss profit

RRSP reform, such rollovers will
not be allowed after the 1989 tax
year.

The proposed new rules will also
allow pensioners to put up to
$6,000 a year of their private pen-
sions into a spousal RRSP (again,
above the normal contribution
limits), from 1989 through 1994,
© Should you have an RRSP?
“While the RRSP is the best tax

ee
“*The money in.
RRSP investments
grows tax-free.
But when you
take out your
RRSP money,
every dollar will
be added to your
income the year
you receive the
money,’”’

shelter for the ordinary person,
you should also review other ways
you might use your money," said
the CGA.

For example, saving for a down
payment to buy a home might be
more important than saving tax
and saving for retirement. Still, a
high-tax-bracket person could con-
tribute to a low-tax-bracket
spouse’s RRSP and not make any
further spousal contributions for
three years. The low-tax-bracket
spouse would then withdraw the
funds toward the down payment.

Paying off non-deductible debts
— credit card balances, personal
loans, the mortgage — could make
you feel better personally as well as
financiaily. Debt reduction usually
beats contributing to an RRSP if
you are in the lowest tax bracket.

if you are in a higher bracket,
consider contributing to an RRSP
and then using your tax refund to.
reduce your debt.
© Which ts the best RRSP? You
want a plan with high return yet
enough safety to allow you to sleep
well, low (or no) fees and flexibili-
ty so you can shift your funds
when your and the general eco-
nomic situation changes.

Review what your financial in-
stitution offers. Check the com-
petition. After you buy, review
your RRSPs reguiurly.

Commadities Dept,

What Next?

For a free 6 week
Subscription to our Futures
Research Weekly Report

Please call: Richard Helm
Futures & Options
Department

ScotiaMcLeaod 661-7462

Busted snvmcinent advice since 1921