your RRSP strategy

Take the RRSP check-up for the big picture

HERE’S an RRSP checkup that lets
you judge whether you should
worry about jumping into the RRSP
> fray this month.
Circle 3 for always, 2 for usually and 1 for

rarely. At the end, total up the points of your
self-examination.

3-2-1 My plan includes a clear list of my retire-
ment goals — in writing.

’ While most Canadians
invest in RRSPs, the vast
majority miss out on the fun
part of saving — dreaming
about how to spend their
fetirement money. Less than
10% of people with RRSPs
have a written plan for retire-
ment. It could be as simple as

oe getting out on the golf course

: ~ five days a week, ‘coaching a

local hockey team or planting

the neighborhood’s best gar-

“den. Writing out your plans
makes them more achievable.

3-2-1 I know exactly how much I will need to
_| ++ apachieve my goals.

; : After you have figured out some of your
goals — be they travel, going back to school,

- new hobbies or staying in your current home —
putting a dollar figure on them is not that diffi-

cult. One tool is the inflation table, which pro-

“jects how much inflation will eat into your pur-
chasing power. For instance, a good golf bag

“If you don’t
use up all your
allowable con-
tribution you

can carry it for-
ward to future
years.”

and clubs that cost $1,000 today will cost about
$2,100 in the year 2010, assuming a five per
cent annual inflation rate. Expenses such as
property taxes, food and transportation can be
calculated the same way. Calculating those costs
will tell you how big your RRSP will need to be.

3-2-1 I make regular RRSP contributions well
before year-end.

Most Canadians still contribute to their
RRSP in January or February
to shelter earnings from the
previous tax year. By doing
that they miss out on interest
or capital appreciation thar
flows from investing regularly
throughout the year. Pay your-
self first. If you have a problem
saving money, consider a pre-
authorized savings plan, which
automatically transfers funds
from your account to your
RRSP.

3-2-1] J make the maximum
allowable contribution to my
RRSP each year.

That maximum contribution varies from
person to person, but generally it is 18% of
your annual earned income or $13,500,
whichever is less. If you don’t use up all your
allowable contribution you can carry it forward
to future years. Say you are allowed to con-
tribute $13,500 in 1995 bur only put in

See Savings page 29

Ali Draws & Playoffs

~ Regular Seats

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3
ring
"| S7

BORROW MONEY TO SAV

MONEY?

}

I.

Borrow $t5,000,
(Oras nuh as $50,000* at rates as low as Prime**)

hoi

ARE YOU KIDDING?

THE Scorna RRSP
Carcu-Ur" LOAN
(Here's a quick math version as
av example, just to get you thinking. j

“Let's see if I've got this straight.
Instead of losing the advantage of J
my unclaimed RRSP contributions, f
I can take a loan, just this once.

Today, f will pull out that nasty fil ;
that says MY INCOME TAX.The ose with my:
name and ail those numbers on it. The one that
mukes my blood run cold. VH find the square °
that tells me how far behind Lam on my RRSP.

Congratulations.
Asol this vear you qualify
for $15,000 in unclaimed

RRSP contributions.

potential. Then Vl walk it over to my neigh-
bourhood Scotiabank and [ll ask them for a
Catch-Up Loan. This | will do, and UU do it now”

GEE BACK SO,.200 ON YOUR PAN REL OBN
_ AND PAS OOM N YOUR LOAN.
(This depends on your tax rate, and other stuff.

Doesn't everything?!) .
, * OF course. you'd rather not borrow. But this is

borrowing to save. The idea is to do this once, so
you can catch up and keep up.

ml
2.

Pw BAC SIST/MONTEL.

(Seem possible? If need be, you can take

up to 10 years to repay.)

4 .
WaArC ER YOUR RESP GROW FO STS 361 Os
SVE AEN OND 0 MONTES. WEAN VOCE fF OraN as

If vou only had the moncy!
What to do! What to do!? ; '
I's not entirely painless to squeeze out another

$157 per month to pay back the Cateh-Yp Loan,

March Ist. . :
aren but you cando itand live to count the rewards.

It keeps coming around, ready or not. ar .
1 Keeps coming i ov Point is, vou can do something.

And every year they say you have the privilege of

PAE OL TEN 2S VO ARS VOLES CEWE SATSS OO.

Because doing nothing is the worst idea of all.

catching up on your unused RRSP contributions.
Gee, thanks a fot.

Every year you start out with strong resolve.
Good intentions. Promises. You know you ought
to de it, but then March Ist rolls by and some-
how the money's not there. Your unused RASP
contributions grow and grow, until they get way
too big to handle. And you just give up.

What to do! What to do!?

(SO WHO'S KIDDING?)

(Here comes the fine print. The example
above is based on the following assumptions.)
 t}-Investor is in 40% marg:al income tax bracket and is eligible tor a $6,000 tax retund.
4 2)-Loan is amortized over 10 years and is subject to applicable credit criteria. Loan rate
& ins this exampie is 4.75%. Actual rate may vary and i lixed for each term of the loan ~ 1 te
@ 5 year terms available. 3)~Tax celund is used to pay dowst principal al ths fourth month -
% you pay back an additional $10,348 (£9,000 of principal & $1,348 in interest). 4)~RASP
a investments earn an average annual compound return of 4.75% in 4 diversitied portfolio.

=
pps
tes,
ea,

Scotiabank &

What todo."
1-888-267-5483 wwwscotiabank.ca
(So much for fine print. Talk to us. . tegistered trade-mark of The Bank of Nova Scotia.
We speak in large print.)

applicable credit ¢ it.
January 10, 1997 was 3.75% and is subject to change.

Trade-marks of The Bank of Nova Scotia, *Subject to
**Scotiabank’s Prime rate as of