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BUSINESS

43 — Wednesday, September 13, 1989 - North Shore News

In financial world, prevention is
better, more profitabie, than cure

WHEN DID you have your
last annua! financial
checkup?

You probably visit your doctor
and dentist regularly, even if you
have no specific problem — just to
make sure your heaith does stay
problem-free. And you should take
the same approach to your per-
sonal finances. Why?

© Prevention is better, easier —
and more profitable — than cure.
For example, splitting income or
taking other steps now could save
hundreds and sometimes even
thousands of tax dollars ‘or this
year, as our summertime tax tips
series showed. If you leave it
amnaking this move), you could lose
it (saving that tax). You could then
have a tough time finding other
ways to make up for that lost op-
portunity.

© Tax laws and their interpreta-
tion change regularly. The invest-
ment outlook varies almost from
month to month. Unless you keep
up with all these developments,
you could be missing ovt on a
smart move te save more tax or
make more money.

© You might have had a change
in your personal life. Whether it’s
a specific event (see the checklist)
or simply a change in your
attitude, such a development could
have a dramatic effect on your
persona! finances. .

These days, it’s rare for 12
months to go by without some
changes inside or outside your per-
sonai life. The challenge:

(1) Realize how those changes
affect the way you earn, spend,
save, borrow and invest money;
how you plan for and during
retirement; how you keep your in-
come tax bill as low as legally
possible. _

(2) Take the appropriate steps
new, prompted by an annual

checkup, to keep your finances on
the right track.

If those steps don’t become ob-
vious, perhaps ask a financial ad-

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visor to help you with this review.
Use the following list to alert
you to changes — first personal,

then external — that could affect
your money. Circle the applicable
items.

« Finding or losing a spouse or

other partner.
© Having (or expecting) a child.
® Changing jobs (losing a job,

dollars

and sense
Mike Grenby

entering/re-entering the work
force).

© Getting a raise (or taking a cut
in pay).

© Starting your own business

part time or full time, or support-

ing a family member in such a ven-
ture.

© Feeling pressure from higher
debts.

© Retiring.

® Buying or selling a home.

© Losing a significant amount of
money on an investment.

© Receiving a windfall (invest-
ment profit, inheritance, insurance
payout, property settlement, etc.).

¢ A serious illness (yours or a
family member’s).

® Going back to school.

© Starting to support a child or
spouse at college.

© A death in the family.

® Other personal change.

© Changing stock market
outlook.

© New tax rules introduced by a

federal budget (Finance Minister
Michael Wilson brought down his
latest budget last Aprii 27).

e The economy’s direction: in-
flation, recession, more
unemployment.

*® Demographics:
population mix,

® Other external change. .

All these factors can make a big
difference to you and your money.

a_ changing

For example, population growth .

in your area could increase the
value of your home. Do you enjoy

’ the faster pace of life and more

amenities that accompany higher
population densities? Or would
such increased hustle and bustle
encourage you to move to a quieter
area? :

See Relate
Page 44

Gold is still a good investment

ALL THAT glitters is not gold,
but even gold has lost some of its
shine over the past few months. .

Gold prices are plunging, and
could go down cven more. After
peaking at more that 3800/oz in
1981, gold is trading in the $360
range. Some analysts say it may
even break the $200 barrier.

So, what does all this mean for

gold investors? There’s no doubt
that the gold market is weak, but
this doesn’t mean that investors
should turn their backs entirely on
gold investments.
__ Gold prices are sensitive to in-
flation, interest rates and pclitical
events from around the world. The
global nature of the gold market
means that gold prices can swing
wildly in short periods of time.
The problem is to find the type of
gold investment that best suits to-
day’s volatile metals markets.

So, what are our choices? Essen-

MYTH: Aerts

fect on a swimmer or boater.

FAC e All types of al-

a cohol = affect
physical coordination and
hamper the ability of a swim-
mer or boater.

The effects of one bottle of
beer are the same as one small
glass of wine or one shot of
hard liquor. |

The Canadian Red Cross Socely aie

tially, three alternatives exist.

You can buy physical gold in the
form of bullion or coins. But this
type of gold investment pays no
interest, ties up lots of capital, end
has insurance and storage costs.

Secondly, you can buy mining
shares in companies that are in-
volved in some aspect of gold ex-
ploration, development or produc-
tion. Many of these shares,
though, are highly speculative.
And even for senior gold stocks,
share prices may be more related

. to the stock market than the gold

market. In other words, gold
prices may rise or fall sharply
without affecting share prices.

A third type of investment in
gold involves purchasing gold
futures contracts on an interna-
tional market such as COMEX, an
international cemmodities ex-
change in New York.

A gold futures contract offers a
direct investment in the yellow
metal, and enables you to control a
large amount of it by putting up
only a small amount of its total
u e .

' This leverage can work for an in-.

vestor when gold prices move up
or down. It can be the source of
large profits, but significant losses
can occur if the gold market moves
adversely.

For those investors who are at-

tracted by the potential profits in
this market but not the associated
risk, options on gold futures con-
tracts are recommended.
Rick Peterscn is with investment
dealer Walwyn Stodgell Cochran
Murray Ltd. He can be reached at
669-6262. .

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