From pace 39

This would mitke the bond words
about S280) Phis is Calculated bs
taking the interest pay mea and
finding out what pres you would
pay ta get SEO0 in interest. This
bond would be ata $750 discount to
pac vue. Hence, discatit bonds
exist when it previously issued bond
hits a tower coupon rate than current
Inarket interest nutes. The larger te
difference in rates and the loager
the term to anttarits. the greater (he
discount.

The discount is ser iniportani ie
IMO NVestors becatba iUS Giscd ats
capital gums ind not tiierest
income. ‘To refresh vour caemory,
capital gains are 3/4 tixable as
income. For iivestors on high ana
ginal ies brackets this can add sige
hificantly to after-tax income, Sony
of the factors thar must be tiken
Into Account are:

* the number of years uatil the bond
tare,

e the issues of the bond and their
credit rating:

ethe amount of discount:

* your marginal tax rate:

¢ whether or not this bond will be
held in an RRSP or RRIF; and

* the coupon rate on the bond.

Buying bonds ata discount isn't
tricky or difficult if you understand
the tax advantages and can draw on
the experience and resources of a
qualified investment advis

The Bottom Line is this: There
are investments available that meet
the requirements of even the most
risk-averse investor, An investment
that has been brought to my alten-
tion is a Gov't of B.C. bond that
matures in January of 1999, [tis
priced at 88.90 cents on the dollar
and has a yield to maturity of
$.70%, Taking into account the tax
advantages of the discount. an
investor in the highest marginal tax
bracket would realize 9.80% on this
four year investment.

Russell Moldowan is an iavest-
ment adviser with ScotiaMcLead.
He advises on investinent manage-
ment and retirement planning, if
vou have any questions on discount
bunds or would like to have.me
answer your questions privately or
in this coltunn, you may contact me
at 661-7475, e-mail at
russelln@unixgube.ca, or write nie
at PO. Box 10342, Pacific Centre,
Vancouver, V7¥ 116.

Stephen Wong

Marinacise

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