BEYOND the fact that it’s always a good idea to save for the future, some financial believe the next two decades offer an exceptional opportu- nity to build wealth. In 2015 — After the Boom, Garth Turner rea- sons that North American baby boomers are entering their peak spending and investing years. This, he says, should keep financial markets in Canada and the United States strong. “Another reason to invest now is the concern that many of us have regarding the future of the Canada Pension Plan — despite recent govern- ment assurances and changes in the plan,” said Bruce Hryciuk, FCGA and past president of the Certified General Accountants Association of British Columbia. “In 2012 the boomers, the biggest genera- tion in Canadian history, will start turning 65. At present, boomers make up 33% of Canada’s pop- ulation. By the end of the first decade in the new century, the number of retirees in Canada will begin to grow steadily, putting considerable strain on cxisting social programs such as health care and government pension plans. “We also have to consider the bigger picture beyond our jobs, families and lifestyle, and look at trends in society, cconomics to understand how some fundamental issues such as interest rates and demographics can shape the furesecable future.” Hryciuk suggested “leaving the speculation to the financial gurus,” and looking instead at something that anyone can understand and, bet- ter still, get involved investing for your future. 1. The earning power of compounding. Compound investment income comes from the interest/dividends paid on investments at periodic intervals which are then added to the amount of the investment. That means your investment will grow over time even if you do not continue to add new money to it. Assume for instance that you had $10,000 to invest on which you could get a RRSP: AN ACRONYM MEANING PLAN NOW FOR RETIREMENT Plan ahead for a bountitul NEWS phote Mike Waketleld INVESTMENT opportunities abound and because North American baby boomers are entering their peak investing years, the financial markets should remain strong. return of 8%, compounded annually. How long will it take to double your moncy? The Rule of 72 provides the answer: Divide 72 by your investment’s annual yield; the answer tells you how long it will take to double your cap- ital. Example: $10,000 growing at 8% a year will double to $20,000 in (72 divided by eight) nine years. The combination of regular investing and compound intcrest are extremely effective in building wealth and what impact a few percent- age points difference can make in investment growth. An annual investment of $5,000 compound- ing at 6% annually over 40 years will lead to an accumulation of $1 million, while the same annual investment at 9% will generate roughly No-Fee RRSP Offers Priceless Security Investors who are currently irritated by paying the fees to institutions who administer their self-directed RRSPs should be in touch with Investment Advisors Brad Wait and Erik Dekker at 643-7747. Canaccord Capital ensures clients have access to all investments. Holding investments inside Canaccord Capital's No fee RRSP means there are no set up costs, and no annual administrative fees. Full service entitles investors to current information, swift and accurate trade execution, and personalized investment advice consistent with each individual's personal investment objectives. Erik Dekker, BBA, are both long time residents of North Vancouver. If you have any questions on contributing to an RRSP or how to invest the funds in your RRSP, talk to Brad or Erik, your North Vancouver investment advisors. They can be available to meet with you in your home or office at your convenience. For more information on our No Fee-Fuli Service Self Directed RRSPs please call 643-7747. twice as much over the same period, Work your investments harder and 12% will produce more than $4 millien, 13% about $20 million. 2. A hedge against the future. You never know what the future holds. A man recendy lost his job with a large national compa- ny. In the 14 years he worked there, during which ime he completed a degree in economics, he moved from clerical work to a middle man- agement sales position. The company changed hands and people were laid off across the coun- try. With a wife and ovo young children to sup- port as well as mortgage payments to make, he could have found himself in dire straits. Luckily, he’s been saving for much of his carcer. With a nine-month severance package and the quick mental conversion of the family holiday fund into a rainy day fund, the family may even come out on top. If he finds work before the rainy day fund is used up, he can leave the entire severance payment in a tax-sheltered registered retirement savings plan and come out well ahead. Otherwise, he can draw from the severance payment as needed while keeping the family in a Jower tax bracket.The fact that the family has been saving changes for what might have been a very rainy day, or month, or year, into a cloud with a silver fining. “While losing vour job is never pleasant, sith the right amount of planning it doesn’t have to be devastating,” Hryciuk said. Keeping berween three- and ninc-months’ salary in investments you can easily draw from if need be makes a lor of sense. ‘The appropriate amount to set aside in your “rainy day” fund is best decided by evaluating your employment situation and skills to deter- mine how long it might take you to find another job if vou find yourself out of work. Look at what's happening in Canadian organizations sim- ilar to yours to try to get some idea of where you stand and what could happen. 3. Hold on to your hard-earned money -—— using your registered retirement savings plan to reduce taxes. “Depending on your annual income, the gov- ernment takes anywhere from around 25% to just above 50% of what you earn annually in the form of income tax,” said Hryciuk. “By putting moncy into an RRSP you can save in two ways. An RRSP gives you an immediate tax deduction in the year you put funds in to the plan. And, money you have invested in an RRSP can accu- mulate interest, dividends and capital gains tax fee until vou begin to draw from it, no later than the end of the year after you turn 69. An RSP Loan For Today And Tomorrow. My future is important to me. So when my Royal Bank RSP Specialist showed me how maximizing my RSP contribution with an RSP loan can pay off,! knew | had found the right solution. | even made up missed contributions, so now | can count on a larger tax deduction today, and bigger retirement savings tomorrow. And best of all, I'm getting my Royal Bank RSP loan at an affordable prime interest rate. That makes me fee! good aboct tomorrow today. Visit a Royal Bank branch for your free consultation today or cal! 1-800-ROYAL'9-9. RSP solutions ” 8 ‘ROYAL BANK — Www. royaibank Com Te Tate sett oo Ke yat Gane cd v ectacha “MEMBER OF ROYAL BANK FINANCIAL GROUP A . op . .