BIS - Friday, May 11, 1984 - North Shore News Gi business ABOUT INTEREST Interesting facts YOU’VE HEARD the only route to a sound investment strategy is a planned savings program — putting a certain amount aside from every paycheque. It’s called ‘‘pay- ing yourself before you pay anyone else.”’ Yet it sometimes seems that you are trudging up a high mountain. Will your savings ever amount to anything substantial? YOU CAN FIND OUT It’s important — both for financial planning and to give yourself a psychological lift — know how your savings are growing. There are several ways to find out. First, there’s some basic math, known as the ‘‘Rule of 72.”’ . Divide the annual rate of interest you're getting into 72. This shows how many years it will take to double your savings. If you're get- ting 8% a year, they’li double in nine years. Many savings plans offer interest compounded semi- annually or even daily. On these plans, your money will double faster. Two other yardsticks are called ‘‘compound interest tables’? and ‘‘accumulation tables’’. These are found in many financial planning books, and you occasionally receive them free as a promtion from a financial adviser or institu- White hot stock Market attention has tutn ed to the shares of Compaimes involved in the capital poods sector of the coonomy The Progressing COONOMIG FOCONEEY 1s from ao strony consumer based expansion to one that is now leading to an merease tn orders to heavy manulacturers Steel producers profits and share prices should steadily capand through [OKA as a result PROFETIS ALE (ROUND The weak osidustrs daimentals ot baNK a Whe fais PYRd Before ad Vator further too Standing ii LOX s poods fain Sberuded WON Pirtes eabCponry in yond Athol caportabl sporrediray will beudery arnt sot ttre Moro news will baa omits be core hater va the se ccich bead yeat thie ttrat othe estimatcd drop ot PON) tbat feok proba oun Liam 4 wall tee tabbed apreh ceca sorta hoard Kew th ceed cl tee bev ort head Cs RY prt erp ns bert Proouihd toe Vertraned rT Ve or beatae atid vpepelbatin ess ita biadee s trol Cageripetve tet anid © rite. tpeels te sade bt ree tr Poaxpecrts vtaa \ tion. It’s worth borrowing a book from the library to copy the tables. What do they tell you? The compound interest table will tell you how much a dollar earns over time at a given compound interest rate. It will tell you at a glance that in five years at 10% interest, a dollar will be worth $.61. Multiply that number by the amount you are investing and you know where you stand. This table is also a way to gauge what inflation is doing to your money. It will tell you that, at 7% inflation, your dollar today will be roughly half its value in 10 years. The accumulation table will inform you how much you must put aside each year tO meet a certain financial goal — like the amount you will need to have saved by the time you reach retirement. IT GROWS AND GROWS If you decide youcan afford to put away $1,000 a year, the table will tell you that in five years you will have, at 8% annual interest, $6,336. In 35 years, at the same in- terest rate, you will have $186,102. This should en- courage you to stick to your savings plan. Incidentally, all the above calculations are for pre-tax earnings, of course. To accumulate money at these rates in the real world, you must plan ahead by deferring taxes through a Registered Retirement Sav- ings Plan (RRSP) or Registered Home Ownership Plan (RHOSP). Otherwise, after the $1,000 tax-free limit set by the government for total income from interest, ‘*grossed-up’’ dividends, and taxable capital gains, you can pay a good slice in taxes. So find out how much in- terest your savings are earn- ing, and make your financial plans accordingly. The Bank of Montreal of- fers free brochures on money management. Write to Con- sumer Education, Bank of Montreal, P.O. Box 6002, Montreal, Que., H2Y 3S8. 1; 3 2 YEAR TERM S YEAR TERM INTEREST PAID ANNUALLY DO OTHER GUARANTEED INVESTMENT CERTIFICATES MEASURE UP TO ROYAL TRUST’S? We have exactly what you want in a G.1C.: competitive rates, unquestionable security and a full range of term and interest options. There is no need to look any further than Royal Trust. Call us now for full details. == ROYAL = TRUST Financial Services 1760 Marine Drive West Vancouver, BC 922-3276 "Rates subject to confirmation tinterest paid at maturity Member Canada Deposit insurance Corporation 555 Burrard St Vancouver BC 668-5162 2118 W 41st St Vancouver, BC 263-0951 2899 S Granville St Vancouver, BC 668-5050 THE ECONOMICS OF BUSINESS TRAVEL BRoyistered aude annie oF hates: