BUSINESS Are your investments earning their keep? | HOW MUCH do your in- vestments cost you? Are they earning their keep? Or are the costs — some of them relatively hidden — doing more damage than you realize to the long-term growth of your invest- ments? And if so, what can you do? It’s not enough to simply find an investment which will increase in value and/or provide a regular income. On the surface, the in- vestment might appear to be per- forming satisfactorily. . But by the time you Jook at all the costs, that performance could well become unsatisfactory. And the sooner you discover this, the better. When you buy mutual funds, for example, you might pay a sales commission — either a front-end load when you buy or a back-end load when you sell. :- Whether or not you pay this charge, you do pay an annual administration fee, often taken monthly. This cost can run as high as 5% of the money you have invested, and these fees have BUSINESS BRIEFS » RESTAURANT SALE WEST VANCOUVER’S Milieu Restxurant and Patisserie at 15th and Bellevue Avenue is under new ownership. : The business has been purchas- ed, by chartered accountant and long-time West Vancouver resi- dent Noordin Madatali. He has become a big fan of the restaurant ~ business and now spends a good deal of his day travelling from table to table greeting customers. Milieu first opened as a restau- rant and bakery in 1985. It was originally designed to avant garde standards, but seven years later Madatali says it is in need of a fresh new image. - Some of the changes planned for the business include: @ hiring a professional continen- tal chef to manage the kitchen; @ hiring a new restaurant manag- er; ®@ introducing new products like Milieu Brew draught beer, brewed locally in Horseshoe Bay and which will be coming before Christmas Eve; . @ installing new decor and styl- ing; ® introducing more’ complete table service; ’ @ having restaurant promotions that will benefit the local com- munity. An example of this is the receipt by the West Vancouver Library Foundation of a 50 cent donation from each free Milieu coffee in the takeout section until Christmas Eve; been increasing. When you buy individual stocks or other securities, again there’s a cost in almost every case. Whether you deal with a full- service or a discount broker, you pay a commission when you buy stocks and a commission when you sell. When you buy other securities, your cost might be the difference between what the bro- kerage house paid and its selling price to you — a markup. In some cases, the brokerage commission or other fee is paid by the security issuer, whether it’s a company issuing stocks or Ottawa selling Canada Savings Bonds. When you buy revenue proper- ty, you pay: @ purchasing costs, including legal and appraisal fees and some- times purchase taxes; ® eventual selling costs, including the real estate salesperson’s com- mission; @ operating costs, property taxes, maintenance repairs. You should also assign a value to the time you spend working on the property, whether simply deal- ing with tenants or possibly also doing maintenance work. Even if you buy your own home Michael Grenby x DOLLARS AND SENSE as an investment, you should in- clude all those costs — as well as the value of your labor if you do repair and improvement work yourse!f, When you invest in a business, you usually must allow for one- time startup costs if it’s a new business or possibly ‘trenovation’’ expenses if you are buying an ex- isting operation. You most certainly will have marketing and operating expenses. Again, remember to include a fair value for your time. You might take $45,000 out of the business in salary or. dividends. But if you work 80-hour weeks, you also need to add a figure for the value of your ‘‘overtirme’’ when compared with working in a comparable job as an employee. And you should probably alse put some sort of cost figure on the additional personal stress in- volved. Granted, all your efforts should be increasing the value of your business. But you must subtract all the costs involved to determine your true profit. That sort of number-crunching should take place before you even consider a business —- or any other investment. And an annual review of those figures will help you decide whether to keep your investment. Some of the investment costs and expenses can be reduced if you ask (like stock brokerage and mutual fund commissions, for ex- ample, or even real estate com- missions). There’s rarely room for negotiation with these next two BUSINESS BRIEFS @ spending over $250,000 on im- provements in the kitchen and serving areas. BUSINESS GROUP GROWS THE B.C. Federation of Agriculture is one of four new business organizations to join the Coalition of B.C. Businesses. The coalition now includes 24 organizations representing more than 50,000 small and medium- sized businesses from throughout Coalition members recently met in Vancouver to attack what the coalition called the B.C. govern- ment’s failure to respond to the concerns of smail and medium- sized businesses over Bill 84, B.C.’s new labor code. “Small and medium-sized one for each provines and territory and T resenting He country as a itelic The 1992 Commemorative Silver Dollar sterling silver tribute ta Canada’s carly travellers Proof 23"" Uncirculated 47 °° J&M COIN, STAMP & JEWELLERY Vancouver 106 W.Broadway - 876-7181 Metrotown Centre 439-0753 The 1992 Proof Set 4975 18° businesses create 90% of the new jobs in today’s economy, but the provincial government continues to ignore our concerns,”’ said coalition co-chairman Kathy Sanderson. “Coalition businesses employ more than half a million workers,’’ she said. Also joining the coalition are the B.C, Supply Dealers’ Associa- tion of B.C., the Machinery and costs: inflation and income tax. Inflation steadily gnaws away at the buying power of your money. The Rule of 72 (divide the infla- tion rate into 72) tells you how often (in years) your buying power - is cut in half. Because you often pay income tax months after you receive your investment income or profit, again you don’t immediately associate the two. But you need to calculate both the inflation and tax costs, as well as any other expenses, when you work out the true return you real- ize in your investments. Finally, there’s the ultimate cost of losing money if the value of your investment drops. ‘That’s the cost to the risk you take, although it’s hard to quantify. At least you can ask: Is the potential of a higher return ade- quate payment for the risk? Mike Grenby is a .North Shore-based columnist and in- dependent financial adviser who works with individuals; he will answer your questions as space allows — write to him c/o The North Shore News, 1139 Lonsdale Ave., North: Vancouver V7M 2H4, : Equipment Marufacturers’ Association of B.C. and the. Society of the Plastics Industry of Canada. Sanderson also announced that the coalition will stay together to speak out for small and medium- sized businesses on matters such as employment standards, pay equity arid human rights legisla- tion. Say yes hy giving a gift of lasting value ffom our Canadian heritage. The Roya! Canadian Mint presents the Canada 125 Coin Series commemorating Our Nation's 125th anniversary. — 9S J&M125 SERIES SET Available in: map presention folder or hard plastic case with gold stamping. 25 THE PERFECT GIFT SET! Each set comes with an enhancement card to ensure its’ investment value. 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