B8 - Wednesday, January 23, 1985 - North Shore News

fl business

Ins and cuts of RRSPs

NE QUESTION frequently asked by our
clients is, ‘‘What is the difference between
Equities and Guarantees, and which is bet-

ter for my RRSP?”’

First of all, remember that
equily denotes ownership.
Most people understand that
the equity in their, homie is
that portion of the market
value which belongs to them
after deducting the, amount
outstanding on the mortgage.
Likewise, a typical equity in-

) vestment such as common
stocks, denotes a share of
ownership in the corporation
issuing such stocks. (In both
the above examples, the value
can only be realized when
someone else can be persuad-
ed to buy it. Additional valuc
can come from the earnings
of the property. For example,

a house can represent. 1 ‘rental. «
value whether .we live} i in it. .

ourselves or rent it to se ne-

‘one ‘else. Likewise,-common .

stocks. may. pay dividends.

within an RRSP cannot be
used to offset taxable capital
gains elsewhere. Another ad-
vantage frequently quoted
for investment in stocks is the
dividend tax credit. This par-
ticular tax concession
recognizes that dividends
represent after-tax distribu-
tion of profits and is intended
to avoid double taxation.
However, the dividend tax
credit is lost in an RRSP.
Nevertheless, some equity-

In both cases, neither, the ’ -f

market value nor the rate of
return are guaranteed. Never-
theless, over the years, many
people have realized sub-
stantial capital gains in both
‘real: estate and the stock
tnarket and enjoyed satisfac-

tory earnings during the ac-

cumulation period. Likewise,
many others have been burn-
ed - through. unsuccessful
‘speculation in real estate or
through .the| decline“ in the
“market value, of their ‘stocks.

So, what has ali this to do
-with “RRSPs? First of all,
“remember that real estate is
hot an eligible investment for
‘an RRSP..We have quoted it
‘above merely to help explain

the nature of equity invest- 7
‘ment. On the other hand,’ a

great deal of RRSP money is
invested i in stocks. ~
:. Conservative financial ad-

visers “generally. ‘recommend .
‘against equities for RRSP. |

funds. Although there may
well be an argument in their
favour for, the younger and
“more: aggressive’ investor, it
:should be realized’ that ‘most
of the ‘advantages of equity
‘investments “can best. be
‘realized | outside‘ an RRSP.

‘. Forexample, the:most po:

tent reason for; investing in
equities is the hope of capital
gain. Outside an RRSP, such
capital gains are only 50 per
cent taxable whereas the pro-
ceeds from an RRSP even-
tually will be-100 per cent tax-
‘able. Furthermore, any
capital losses experienced

The Marx Brothers ‘af Brass”
iNew Yurk® Times)

In Concert with the
Vancouver Chamber Choir

Wed. Feb. 20
8:00 p.m.
ORPHEUM

Generously
sponsored by WATICITY

A CRC Broadcast Event

Tickets: VIC outlets, CHO,
Eaton's, Woodward's.

Credit Card Line: 280-4444

Information: 738-6822 -

A Benefit Concert fir the
Vancouver Chamber Chiat
Fadowment Fund
ee)
Ruy tickets before Feb. 6, and
win a $3,000 Mitsubishi Stereer!

‘Invested:
Value today:

based RRSPs have perform-
ed extremely well particularly
during the very bullish period
of a few years ago.

Even when such gains have
been substantial, we still
recommend that RRSP funds
be switched to guarantecd in-
vestments as one gets older.
The closer che gets to, retire-
ment, the :nore vulnerable
one becomes to a sudden
drop in the market. Further-
more, if the funds become
payable to your estate on
death, they will have to’be li-
quidated regardless of ‘the
state of the market.

For all of these reasons we
recommend against equity in-
vestments in RRSPs for most
people and particularly as

$20,200
$74;800.

’ Investor location: Vancouver, B.C.
Fund selected: Industrial Growth Fund
Investment made: March1977-

_ Total invested: $20,225.00
Value (December 1, 1984): $74, 842.00

Has your RRSP done this well?

Hit hasn't, you owe it to yourself to find out more about
Industrial Growth Fund and what it has achieved on behalf of more” =

than 100,000 Canadian investors.

. ‘Theexample we've shawn is an unsheltered investment, And
we can't guarantee the same results for you, But. then, long-term
past performance is the best guide to the future. Industrial Growtlys
record over the past 17 years speaks for itself, And its manager.
Mackenzie Financial Corporation, is very optimistic about the

years tocome.

For the complete story on an Industrial Growth Fund RRSP,
including a comparison with other investments, return the coupon. '

iclow, or call. Today! .

CT Please send me information on what Industrial Growth Fund could mean:

to my retirement planning.
NAME

ADDRESS
POSTAL

PROV. CODE

PHONE ee
(BUSINESS)

woydon Investment

Cn Ione

988-6737

561 Croydon Place, North Vancouver
V7N 229

Offer made any by pruspevtas

one approaches actual

retirement.

Remember that the real
tate of interest on money is
the difference between the
rate of inflation and the ac-
tual rate of interest carned.
On this basis, we can earn un-
precedented high rates of in-
terest today on guaranteed *
investments. This is certainly *
not the time to be taking un-
necessary risks with retire-
ment funds through equity
investments.

Pause © COUT yous, |

hin tou hip 1 24, huiits « ‘day Fdaywaweek

A $3,500 RRSP
contribution today
can give you $32,280
when you retire’!

That’s the power of compounding—and Merrill
-Lynch Canada’s TIGR’s™! TIGR's, a relatively
new investment product from Merrill-Lynch, are
ideally suited to RRSPs because they make only ©
one payment—when they mature. Your interest
compounds for the entire investment period,

so you know in advance what you'll earn.

For example: $3,500 invested in our current
issue, ata 11.73% annual
compounding rate, will grow
to $32,280 in just over 20 years.

TIGR's are backed by governments of Canada,
are registered in your name, and are replaceable
if lost or damaged.

Call Merrill Lynch at 682-3311 at no obligation—
and talk to us about your retirement goals.
*Assuining retirement by 2006.
IMTIGR's, TIGR and Term Investment Growth Receipts are trade
marks of Merrill Lynch Canada.

a ee eer em mc Yee ae
© Please send me more Name
information on
Merrill Lynch TIGR's

- >
= Qa
* co
i 3

g

O Please send me more
information on
Merull Lyneh RRSP
Blue Chip Service

row. Postal Code

“Bus Phone

Mail te:

Merrill Ly neh Canada Ine.
Suite #00,

666 Burrard Street
Vancouver, B.C. VOC 3A5

Home Phone —

Merrill Lynch customers please give name
snd office address of sour Acconnt Executive.

Merrill Lynch Canada inc.

sae
is Merriil Lynch