20 - Sunday, January 11, 1987 - North Shore News Business —___ IT IS NOW 1987 and taxpayers will soon be thinking about their RRSP contributions for 1986 which must be made be- fore the deadline of March 1, 1987. If you have qualifying earned income of $37,500, then the con- tribution limit is $7,500. If you belong to a pension plan, then the limit is $3,500 less your own con- tributions. would be taxable. The following example makes the point quite dramatically: If you were in a 40 per cent bracket and made. a contribution of $7,500 at an interest rate of 10 retirement planning by Bert Wickham However, I recommend you also start thinking about making your 1987 contribution now instead of waiting until the deadline in 1988. Here is why: A_ contribution made at the beginning of 1987 in- stead of March 1, 1988 will have 14 months of tax-sheltered interest growing inside the RRSP. A simi- lar investment outside the RRSP FASPs or bonds - which is _ best?_ CANADIANS buy Canada Sav- ings Bonds” ‘by. the: billions: every year — $12 billion last. year and $15 billion in 1984. And-the number will probably increase this year as a result of the fanfare marking the. -bonds’ 40th anniversary: = » The.option of purchasing bonds on the payroll saving plan make them especially appealing as an easy way to save. But are they the -{ best way? You’re really better off to con- tribiste to registered retirement sav- ings plans, says Peter Clayden, a tax. professional from Deloitte Haskins & Sells. By putting $1,000 into.an RRSP, the average Cana-. dian worker, taxed at the rate of about one-third of income, will receive a tax refund early next year of between $300 and $400. ° Better still, he says, why not contribute. $1,500 to the RRSP — $1,000 that would otherwise go to buy CSBs plus the $500 you will get as a tax refund (at the same one-third rate). You should be able to earn at least 7.75 per cent in the RRSP, more if you shop around, and income will be earned on that extra contribution of $500. . Furthermore, if your $1,500 is in a self-directed RRSP, you can in- vest it directly in Canada Savings Bonds. If you leave the $1,500 in the RRSP for 40 years and it earns 10° per cent over that time, your RRSP will grow to almost $68,000. If you contribute in the same way every year, Clayden calculates you could end up with more than $700,000 in your RRSP. per cent then you would earn a total of $875 in interest over 14 months. The tax deducted from such earnings outside an RRSP would be $390. So, you would have an additional $390 in your RRSP at the end of the 14 months. Assuming a 10 per cent return over 20 years, this single item would grow to over $2,600. If you did rey this every year for 20 years then you would have nearly $25,000 more in your RRSP than if you had invested the same money out- side your RRSP. On the other hand, if you are like most people and do not invest this money separately, then the additional funds in your RRSP resulting from earlier contributions would amount to $55,000 after 20 years.. At today’s annuity rates, such a sum could provide addi- tional pension income of around $550 per month. This is quite a bonus. A note of caution: There is always the chance of over-con- tributing if your earned income in 1987 should not be as high as you expected. As long as you remain below the prescribed limit of $7,500, you will face no penalty, but will have to complete the Rev- enue Canada form and obtain Revenue Canada’s approval to withdraw the excess contribution. These articles are intended to help you make the most of your income in retirement and keep your taxes to the legal minimum. However, as they are of a general nature, readers are advised to check carefully before applying them to their personal situation. “A FOOL FOR A CLIENT!” A SELF DIRECTED R.R.S.P.,* LIKE A LAWYER WHO REPRESENTS HIMSELF, OFTEN HAS A FOOL FOR A CLIENT Has your #.R.S.P. been invested in high risk ventures that should never have been put into a retirement pian in the first place? Did you miss buying Canadian government backed compound interest rate investments of 13.75%? Is your retirement plan compounding the pain rather than compounding the gain? If so you no doubt qualify in the descriptive category above. Why not make a move now, and discuss with us our Maximum Benefits and Minimum Risk strategy, before putting more money into an old plan. This disciplined conservative approach to investing has proven : itsolf to be highly successful, and you can find out why. For an appointment call one of the following:- KEITH GODDARD TRISH HURL IAN CUBITT *Over 500 Registered Retirement Savings Plans currently administered. * at 669-1600 Gal UM ODLUM BROWN f DFOWN 609 Granville Street Investment services as individual as you are Do you know your mortgage balance?...find out from UNITED DATA SERVICES LTD. 681-4423 © one hour phone service ® can handle any problem © 10% discount on orders over $100.00 CALL 681-4425 Straight Answers ... y i fo your investment questions. Talk to a full service investment dealer * Free initial Call ROD CLARK 689-6262 Personal Investing For Women. ; Personal Investing for Women, can guide you through the : fascinating — and potentially rewarding — world of investing. jf In a series of six informative, easy-to-understand sessions, you'll ¥ learn about money management, tax planning — and how you f[ H too can take advantage of both bull and bear markets. Each session includes comprehensive material in a workbook — 2 and some of the tools you’ll need to invest. You'll meet a finan- 4 cial consultant, and other industry members specializing in § # everything from new investment vehicles to tax planning. 2 COURSE COMMENCES TUES. JAN. 20 FEE $95.00 FOR FURTHER INFORMATION CALL KATHRYN BALMER or JULIE COWAN at 682-3311 today yy Gerdie Warner Our star carrier this week has been recommended by people along his route for exceilent service and for . being polite and pleasant to everyone. Gordie Warner delivers 92 Wednesday and Friday News in our Lower Lonsdale Zone and has been a carrier for over 3 years. Gordie is 12 years old, attends grade 7 at Ridgeway School and enjoys Math. His sports are swimming and baseball, his musical talents include playing the piano. Gordie has developed a good system for handling his earnings. The cheque from his Wednesday route goes in the bank and his Friday pay is for spending money and buying the things he wants. We enjoyed meeting this fine young carrier and for being our star, he received complimentary movie passes, a North Shore News baseball cap and a special thanks for a job well done. Joan Cripps Circulation Dept. 1139 Lonsdale Ave., N.V. 986-1337 SUNDAY + WEDNESDAY © FRIDAY