off your bank loans

for RRSPs immediatel

From page 38

‘kept to 4 minimum.”

One of the CGAs pointed out
financial institutions often offer
very favorable rates to people who
want to borrow so they can con-
tribute to that financial institu.
tion's RRSP.

Let’s say you borrow at 10-to-
{2-per-cent interest. You can then
put your money into a five-year
savings certificate in an RRSP pay-
ing 10 per cent.

Because the interest you earn is
tax-sheltered, you actually earn the
entire 10 per cent.

But because you are paying off
the loan over six months, for ex-
ample, you are paying interest on a
declining balance.

“*Your loan costs are relatively
small,"’ said the CGA. ‘And if
you look at your tax refund, then
you really are far ahead.”

The CGA made two important
points:

* Always pay off an RRSP loan
as quickly as possible. ‘‘Otherwise
you could find yourself coming up
to the next RRSP season with the
loan from the previous season still
unpaid.”*

* Provided an RRSP fits into
your personal finances, borrowing
to make a contribution could be
better than missing out.

“So far, you are now allowed to
carry forward unused RRSP con-
tribution room, although the gov-
ernment has proposed a change to
allow carrying forward in future,”*

¥

said the CGA. ‘‘At present, if you
miss your deduction, that chance is
gone forever."*

The CGA acknowledged that
saving up ahead of time to make
an RRSP contribution is usually
better than borrowing.

“But some people just don't
have that discipline. On the other
hand, if they borrow, then they
must make the payments."

This article was prepared by the
Certified General Accountaats
Association of British Columbia,
the province's largest professional
accounting body. For further in-
formation the association can be
reached at 1555 West 8th Avenue,
Vancouver, B.C., V6J 1T5, or by
telephone at 732-1211.

Here’s ali you need for
all kinds of RRSP’s...
— One plan, One pen —

Pick one or more: Mutual Funds

39 - Wednesday, January 13, 1988 - North Shore News

JOHN RIBALKIN of Nova Fi-
nancial Services Inc. discusses a
mortgage application with a
client.

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