Al3 - Sunday; January 29, 1984.-.North Shore News

Sunday, January 29, 1984

‘Of course, the more you inv.
higher the ‘rate of interest, the gr
the compounding effect will be.

comie to the
North Shore.
perts: Each o
| ches offers
members to
sonally and promp buy.

‘The following are some of the most
commonly asked-..RRSP questions,
compiled by. Keith Sanders and Linda
O'Neill, RRSP specialists from our
Head Office. If you have a particular
question about your retirement sav-

ings, feel free to give Keith or Linda a
call at 986-4321 or contact the NSCCU
branch nearest: you.

Q: What is an (RRSP?

iticentive.

* se,. the value
Q:Can!I borrow for or with an. RRSP? . taxable.
A: Yes, you can borrow:to purchase a
an RRSP, but you~ can ‘no longer
deduct the interest on your loan for

money borrowed to contribute to an
; “foes

. every year?

A:No. Your annual contributions are
completely voluntary and, as your in-
come changes from year to year, the

e to withdraw

fe varies from
case but, at

cases, the fun
credited to your i

ALA Registered Retirement Savings...

Plan is a government-approved plan
through: which you save money for.
your retirement years. Your contribu) ~..
tions. are tax deductible, reducing the”.
amount of tax: you pay now, and the >

interest income earned is tax sheltered _
until you withdraw it.

Q: How much can I contribute each
year?
A:lIf you do not belong toa registered
_ pension, superannuation or. deferred
profit sharing plan, you are.allowed to
contribute up to 20% of your ‘‘earned
income’? or a. maximum of . $5,500, ,
whichever is less.:

_ If you. do belong. to a registered pen- _

tion plan, either A‘ Always be sure to'ask about service Year 8% 10% 12% 14% - 16% - 18%

|: contributory of non-contributory, or if charges before deciding ‘onan RRSP. $4,080 $ 1,100 $ 1,120 $1,140 $ 1160 1,180
you belong to a deferred profit sharing North. Shore Credit’ Union’ charges no 2 2,246 2,310. 23 _ 2,440 2,508 2 S72

- plan and contributions have been made fees on RRSPs;-but many ‘issuers still j 3.306 36 5.353 : ar $088 ar
in your name.to the plan in the-year, . do. Heére.are:a: few of the: most com- 5 6.336 SNS PS 7 "536 7977 8,422
you are’ ‘allowed to contribute up. to =— mon: charges: é 7.923 8,487 9,089 9,730. ° 10,414 11,142
20% of your ‘earned income” toa : ’ - ae ‘ "32:
ve, —— v4 9,637 10,436 11,300. 12,233. 13,240 14,327

-maximufn of $3,500 minus the amount — F 8 11,488 | 12,579 13,776 15,085 16,519 18,0

you havé contributed. to your pension ront-end toad “Many issuers sell 9 13,487 “14,937 16,549 18,337 20,321 22,521
or superannuation plan. : RRSPs through commissioned 10. 15,645 = 17,531 19,655 22,045 24,733 27,758
For example, an individual with salesmen: Often the commission is 15 29,324 34,950 41,753 49,980 $9,925 71,939
earned income. of $16,000 who con- deducted. from your deposit and only 20 49,423 63,002 80,699 103,768 133,841 173,021
tributed $800 to a registered pension the net deposit is actually invested for 25 78,954 = 108,182 149,334 207,333 289,088 404,272
plan could contribute $2,400 to his or you. 30 122,346 180,943 270,293 406,737 615,162 933,319
Pe RRSP. 35 186,102 298,127 483,463 == 790,673 1,300,027 2,143,648

$16,000 x 20% = $3,200 — $800 =
$2,400
Q:What is ‘earned income’’?
A: Earned income generally includes
income from the following sources:
eSalary, wages, bonuses and taxable
fringe benefits (minus employment ex-
pense deductions, unemployment in-
surance premiums and union dues)
eIncome from self-employment (minus
current year business losses)
Rental income from real estate (minus
current year rental losses)
“Royalties of an author or inventor
eAlimony or maintenance payments
*Amounts received from a supplemen-
tary unemployment benefit plan
Death benefits paid by an employer
©Taxable payments from an RRSP or
deferred profit sharing plan
eMoncy withdrawn from an RHOSP
and not used to buy a home or qualify-
ing furnishings
eSuperannuation or pension benefits
including Old Age Security, Canada
Pension Plan and Quebec Pension
Plan benefits
*Retiring allowances including ac-
cumulated sick leave credits
NOTE: Interest and divident income
does not qualify as earned income.

Remember, our new Park Royal Branch is open Monday through Saturday and till 8 p.m. on Thursday and Friday nights.

nds.
RRSPs do t not provide any guarantees.

“af yousinvest in these types of RRSPs, ~

Deposit Insurance Corporation, your

guaranteed deposits willbe insured by

CDIC to a maximum of $60,000.
However, if you invest in a

’ guaranteed RRSP at North Shore or
_ any other B.C. Credit Union, 100% of

the deposit will be guaranteed

: regardless, of the amount.

-@ What does an RRSP cost?.

Administration fee This is usually an
annual charge against the carnings of

. your plan to cover administrative costs

including trustee fees, investment ad-
visor fees and the cost of government
reporting. Over a number of years, this
can represent a_ significant. charge
against the carnings of your plan.

Close-out charge Some firms charge
you for closing out your RRSP,
especially if. your plan has been open
for less than a year. Usually a flat fee is
charged; however, some issuers deduct
a percentage of the total value of the
plan.

Q: Will the frequency of compounding
make much difference to my interest?
A: It certainly will. For instance, on
our Variable Rate RRSP, we pay daily
interest quarterly as compared to an-
nually or semi-annually at many other
firms. Let’s examine what this means.

If you were to invest $1,000 per year
for 10 years, at arate of 10%, the total
value of your plan would be affected as
as follows:

With annual interest — $17,533
With semi-annual interest — $17,783
With quarterly interest — $17,952

Sthat iga member ofthe Canada

| first-two factors,. the third depends

three simple factors: the number: Of
years the plan operates; the size of «

annual contributions; and the
average rate of. return earned.
While. you. have: control. of the

largely on the: ‘economy. There i is no

sure way to determine accurately
the rate of return one will receive
many years in advance, but your in-

~vestment objective should be to at

least match the inflation rate.
We've provided - the following
table to show you how annual con-

.. tributions. of: -$1,000::grow at dif-

_ ferent rates of return.

“ Annual Compound Rate of Return