2K) Wednesday, Junuary 27, 198 Noth share Sews USINESS KEY POINTS AND QUESTIONS Find your SHOULD YOU invite . nances? And if so, whic market? Here, broken down into three main sections, are the key points and questions you need when you review registered retirement sav- ings plans — or try to decide if you should even have one. Clip this column. Use it as a guide to help you find that prof- itabie path through the RRSP jungle. Comact an RRSP specialist at your local financial institution if you need more information on any of the following points. THE RULES, An RRSP typi- cally consists of normal invest- ments like savings accounts, term dollars and sense Michael Grenby deposits, bonds, mortgages, mutual funds or stocks. When you put money into such investments in your own or a spouse’s RRSP, you deduct the contribution, That reduces your income and your tax. The moncy inside the RRSP can grow tax-free. When you take out the money, it is added to your in- come tax that year. Ideally, you will then be in a lower tax bracket. But even if you are in the same tax bracket, your RRSP’s tax-free growth should put you ahead of making the same in- vestments outside an RRSP. (Of course, like any other in- vestment, depending on your choice you could also lose money with some RRSPs). Contribution rules for 1987 are the same as for the previous year: up to $7,500 if you do not belong to a pension plan and up to $3,500 if you do, with a ceiling of 20 per cent of your earned income. In addition — and not subject to these limits — you may put into e Do you want to defer more of your own RRSP up to the total amount of pension income for 1987 and, within limits, severance pay you received last year. (Warning: this rollover approach could imperil the $1,000) pension income deduction and could at- tract the alternative minimum tay. Ask an RRSP specialist if these points would affect you.) Deadline for contributing and claiming a deduction for !987 is close of business Feb. 29. Note that you may put an in- vestment you already hase (term deposit, Canada Savings Bond, mutual funds, etc.) into an RRSP and deduct its value as your con- tribution. THE APPROACH. For most people, the RRSP is one of the best investments — and probatily the only tax shelter to consider. Contributing the maaximum for 1987 is particularly important. Tax rates are generally higher that year and should be lower from this year on because of tax reform. You inight even borrow the money rather than miss your chance. Just make sure you repay the loan well within this year. Hur also consider the alter- natives, For example, if you need new furniture or a summer holiday to save your sanity or marriage, go for the mental/marital bliss. Investing in a business might also be a better choice than an RRSP. Paying of f debt could yield peace of mind, which might be worth more to you than a retire: ment savings program. However, you could combine the two approaches: put money in- to an RRSP and then use your tax refund taward the furniture, holi- day or debt reduction. If you are married, use a spousal RRSP to help produce equal levels of income on retirement. The higher-income spouse claims the deduction bur shifts the even- tual caxation of the RRSP into the lower-income spouse's hands. (Warning: cheek the three-year rule which could tax the con- tributer on all or part of this in- come.) If an RRSP is for you, con- tribute as early in the year as possible — for the current, not the previous year. In other words, after you contribute for 1987, start your 1988 contributions as soon as you can, That will tax-shelter your in- come sooner and avoid the annual problem of trying to come up with a lump sum. Another approach: J HAVE YOU A PLANNED STRATEGY FOR YOUR your income tax? e Would you like to take advantage of Compound Interesi? ¢ Do you want a secured, worry free retirement? e Would you like to improve your investment yield? ¢Do you want to be financially independent at an early age? e Would you like free advice with no obligation? I you answered YES {fo these questions — you should have pro- fessional advice from a member of the winning team. The Winning Combination—You, Me, and The Manufacturers For more information call CLIFF GARRETT Office 681-5411 Residence Licensing as required by Iaw held Lifa insusance Company Established J887 926-4461 The Marval by The Manutactuers Ife Inaunawe Company ay through R RRSP into your personal fi- one -~ of the hundreds on the setup an automatic moathly con- tibation program. Make sure vou designate a beneficiary on sour RRSP and in your will -- typically a spouse, sometimes children or grandchil- dren — to minimize income tax in case you dic. THE CHOICES: You can choose steady if unspectacular growth by investing in wt guarantecd RRSP: term deposits/savings certificates, Canada Savings Bonds, Treasury bills. You couid diversify by choosing mortgages or government bonds. Or you could look for more growth with mutual funds or indi- vidual stocks. Your RRSP is part of your total investment program. It should reflect your investment approach. Diversify and reach for the max- imum growth — but make sure includes Tax Reform Details you can sull sleep at might. Shop and compare, “whether you are buying your firs’ RRSP or reviewing existing plans. Look for: * The highest returns (within the risk you can accept). * The lowest service charges and other costs (nobody does anything for nothing — if there appear to be no charges, ask how the company See Understand % nce again we approach the most taxing time of the year. The 1987 tax reform proposals add even more SB “oxcitement’ to the challenge of keeping your income tax bill as low as legally possible. This book will help you meet that challenge. Included in this edition is a step-by-step guide to help you prepare your tax return to make this annual chore less taxing and more profitable. To avoid refund delays and other problems, check your return against the list of mistakes taxpayers make most often. We have also added new tips and revised and updated all tips from the previous eight editions. ORDER NOW Books are on sale at the North Shore News from 8:30 AM to 4:30 THE VOICE OF MOUTH AND WEST VANCOUVER "i cis PM, Monday to Friday. Order by credit card and pick up at the North Shore News. JANICE SILVER — 985-2131 Sel