BN BusINESS Mutual fund investments can be like a rollercoaster “HAVE IE made a_ big mistake?’’ starts out the let- ter from North Shore News reader J.H. “Last year, my husband and I took our RRSPs, insurance cash values and cash on hand and turn- ed it all over to a financial consul- tant. He put all our money into mutual funds. “Our yearly statement arrived to show we now have five per cent less money than when we started. I realize the market left a bit to be desired. “But my husband says these funds are for his retirement in 15 years. At the rate we are going, there will be no retirement. “7 am worried. Even the banks would have given me a return on my money, not a loss.”’ dollars anc sense Michuel Grenby Unfortunately, the perfect in- vestment does not exist. Mutual funds, which might in- vest in a variety of stock market or real estate instruments, give you a chance at better-than-bank-ac- count profits. And you often also get income tax breaks. But as you have discovered, you can also lose money. That’s the risk you take. Considering the losses many in- ‘vestments took in October last year, a five-per-cent loss is not un- reasonable. On a‘scale of one (no-risk in- vestor) to 10 (high risk), rank yourself (and your family). Use that figure to help you decide your correct percentages of low, medi- um and high risk investments. Investing in the stock market and in real estate can be like riding a roller-coaster. If you got on just before a dip, you must stay on long enough to rise to new heights. And if the drops make you feel ill, don’t climb aboard. But investing in guaranteed in- vestments can also leave you feel- ing ill once inflation and the tax man have swooped through. The answer? Forget perfection and go for a balance, a mix that produces as many positives and as few negatives as possible — the combination that feels right for you. “My husband and I own our owa home plus a rental ptace, both registered in both names,’' writes L.M. ‘tHe earns $43,000, I earn $10,000. What are the pros and cons of having the rental! place in my name?’ The tax department looks only at whose money bought the rental property. If it’s your money, you will pay less tax if you sell at a profit and your husband has used up his capi- tal gains exemption and you haven’, or if the exemption is discontinued. If it’s your husband’s money and if expenses exceed rent, he will get more of a tax break by deduc- ting the losses from his other in- come. However, if he takes a prof- it, cumulative net investment losses (see last week’s column) would reduce his tax-free capital gain and cost him more. “Which is the best RRSP?”* asks P.D. There is no single best plan for everybody. So: ()) Re-read my answer to the first question in this column to determine your risk-reward rating. (2) Skim a ‘how to’? RRSP book. Read the RRSP leaflets produced by a couple of financial institutions. Contact a major ac- counting firm for a free publica- tion on RRSPs. (3) Study the Financial Pest and Financial Times monthly/quarterly tables comparing mutual funds eligible for RRSPs. (4) Review the RRSPs offered by your financial institution(s). If they are competitive, deal there. If not, go elsewhere. (5) Review your RRSPs at least annually. Today’s best plan for you might not be the winner next year. “Y’'m confused about the pro- posed pension and RRSP rule changes,”’ writes J.H. ‘‘Fiest I hear I can’t make any more contribu- tions at all after 1989 if I have only Pension income. And then I bear I can put up to $6,000 into a spousal RRSP. Which is right?’’ Both. Next year will be the last chance to roll over all your pension income — without limit — into your own RRSP and make a spousal contribution of up to 20 per cent of your not-rolled-over pension income. However, from 1989 through 1994, a special provision will allow you to roll up to $6,000 a year of your private (not CPP or OAS) pension income into a spousal RRSP. So if, for example, you had $50,000 pension income in 1989, you could split future income by making a regular spousal contribu- tion of $7,500 (the maximum) and a $6,000 special spousal rollover. You could also roll over enough of the rest of your pension into your own RRSP to reduce your taxable income to zero. Note that so far, the changes are only in the proposal stage. ed Do you have a financial or con- sumer question for Mike? Or a story you think should be in “tis column? Please write to Mike Grenby, North Shore News, 1139 Lonsdale, North Vancouver V7M 2H4. Mike cannot reply in- dividually bue will answer as many of your letters as possible through The North Shore News. Remember to include your phone number in case Mike needs to contact you. ~ ADIMISION OF OVERWAITEA °.~ . - FOODS A BRITISH COLUMBAN company OWNED AND OPERATED py BAIISH COLUMRIANS we 45 - Wednesday, November 2, 1988 - North Shore News N PRICES EFFECT. / VE Wesinestiay To Saturday NOVEMBER 2 TO NOVEMBER 5, 1988. Seg the Savings! SEVEN-UP or PEPS! Soft Drin REGULAR or DIET 750 mL BOTTLE SAFEWAY'S: SUPERSTORE PRICE SAVE-ON-FOODS PRICE IS UP TO: 6S Potato Chips OLD DUTCH - 200g SAVE-ON-FOODS PRICE IS UP TO: A2... a Facial Tissue KLEENEX - ASST'D. COLOURS - 200’s SUPERSTORE PRICE 6 SAVE-ON-FOODS PRICE IS UP TO: A.BS. Detergent LAUNDRY POWDER - 8 LITRE SAFEWAY'S: SUPERSTORE PRICE G37 SAVE-ON-FOODS PRICE IS UP TO: 39... Bathroom Tissue PUREX - WHITE ONLY - 4 ROLL SAFEWAY'S SUPERSTORE PRICE N/A -ON-FOODS NIG IS UP TO: WA Campbell’s Soup : - SAFEWAY'S SUPEASTORE PRICE SAFEWAY PRICE CHECK TAKEN THURSDAY, OCTOBER 27/88 AT SUPERSTORE, 3025 LOUGHEED HWY., SUNWOOD SQUARE. Med RESERVE THE RIGHT FO LIMIT QUANTITIES. ~ Webeat Superstore & Safeway a ertised mien On items we stock: ides wil kip: auch com mpi nm ads.” 2.