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wm» 12 -- Scugog Citizen -- Tuesday, February 13, 1996 GO-FER IT! SAME DAY SERVICE (Call by 11 AM ) Serving Cobourg to Hamilton Call for Rates & Schedule GO-FER COURIER SERVICE PORT PERRY (905) 985-2573 JR a sr VS Rr TNE Cree ALENTINE SPECIAL 2nd Set FREE! Bring in your film for developing EL le RUN [Re TARY TVR] 2nd Set of Prints FREE! x 7 (CARMAN FOTO SERVICE) 60 Water Street, Port Perry 985-8821 IT'S OUT OF THIS WORLD! As confusing as it may seem, First We Colored Your World For Eight Years ... Now we offer a Para'Normal Decorating Experience! 24.99 3.78L. LATEX EGGSHELL Our Most Popular WALLPAPER... 99,99 Sale ends Saturday. February 17th at ®, COLORATIONS Paint and Wallcoverings 84 WATER ST., PORT PERRY gp 985-3030 iF The store and staff you have trusted for eight years! LAURIE LYO! YEAR-END INVENTORY Concerned about your water ... 18 LTR. REFILL CLR LIER: Te] Reverse Osmosis Systems ...... rom $495. Ultra Violet Water Sterilizers. from $299. Everyday Lowest Prices: FILTERS @® SALT® BOTTLED WATER #2 RJM photographics =x TAX TIPS by: H&R Block Last week we looked into the advantage of using RRSP's as a means of 'income .averaging' for an individual. This week let us look at the possibilities of using them as a means of income splitting now and when you both retire. If one spouse is earning a high income and possibly has a pension plan at work that will insure some pension income when they retire, but the other spouse will receive minimal retirement in- come, the high earner should consider contri- buting to a 'Spousal Plan'. This produces a tax break at the high rate of the contributing spouse and then (after 3 years of non- contributing to a spousal plan), it becomes the income of the lower income spouse. With the change in the tax law governing the 'age amount', it is even more important to try and split the income more evenly between the spouses. For example, if a couple over 65 years of age were bringing in $50,000., but only the O.A.S. was being received by spouse 'B', the higher income spouse 'A' would have to pay $11,358. in tax. However if that $50,000. weré split evenly between the two, they would each pay $3,849.50 (assuming that part of the income was made up of a RRSP annuity or RRIF) making a total of $7,699. a $3659. saving. You do not need to wait until 65 to realize the savings from spousal RRSP's. Provided three years elapse since your last spousal contribution, the lower income spouse SUFFERI can withdraw the money at their lower tax rate and you are free to once again invest in a spousal plan. In this way you can reap the benefit of high tax rate deductions only to be taxed at a low rate as spousal income every 4th year. This does however negate the'*#ded advantage of sheltered interest whilst in a RRSP which is the main factor in its rapid growth of funds. (This article was submitted by H&R Block, Port Perry.) WHEN DOES IT PAY TO INVEST IN LABOUR SPONSORED VENTURE CAPITAL FUNDS? by: Ken Richards, Fortune Financial Too few good deals, too many funds. That is only one of the difficult tradeoffs for investors who - take advantage of the generous cash rebates available from labour - spongored venture - capital funds! : These funds that invest in emerging small companies may seem like a super deal: Investors in the top tax bracket who buy $5,000 worth for theif RRSP's face the net layout of only $340.00, a mere 7% of the original investment. For some, it's too good to pass up. Now the bad news. The market is glutted with these funds - more than a dozen of them with upwards of $1 billion in assets. Yet geod deals are scarce. After nearly six years, for instance, the $500 million Working Ventures Canadian Fund Inc. has completed 50 venture investments totaling $128.2 million. About RRSP's? Keep it Simple (GEN BBR 1 0 HO) 3 S103 (ON: Be Essentially, the govern- ment has been heavily subsidizing a fund that's 75% invested in cash and short - term bonds. Remember the lessons of the '80's: Never invest only for tax breaks. The investment must make sense on its own, and many labour funds don't, especially since most of the eyecatching tax breaks come from your plain old RRSP. A fairer way to assess a labour fund's attractiveness is to quantify the real tradeoff for the combined 40% federal and provincial tax credits available only for labour funds. Firt, a couple of assump- tions about returns, given their speculative nature, it might be reasonable to assume 5% annual growth. Let's also assume that a Canadian equity fund that matches the stock market returns a compound annual 12% in the long term, as the market has done in the past. The result: Outside your RRSP it would take seven years for the equity fund's higher returns to make up for the labour fund's 40% tax credits. But in the long run, you'd be better off with the equity fund. Is the lower, return assumed for the labour fund'unduly pessimistic? I would say Jo, given the track record of Working Ventures, the only nationally available labour fund. Its'five-year com! pound annual return is a mere 4.4%. . Labour funds have other drawbacks. They generally have unproven manage- ments. They effectively . lock in investors for many years, and there is a risk of unfavourable tax changes. Still, they shouldn't be-dismissed outright. In fact, for long- TIPS & INVESTMENT ADVIOE term investors with well - diversified portfolios,' the right fund might be a good idea. A wgll - managed venture - capital fund has the potential to earn 30% compound annual returns over time - much more than stock funds should offer. Besides, the ups and downs of these funds tend to differ from those of publicly traded stocks, so you can actually lower the overall risk of your portfolio by having a small exposure to labour funds. Here are some tips on how to play them: 1) Select a proven manager. With venture. capital, more so than with regular equity funds, good managers should prosper, and bad ones may bomb. 2) Invest for the long term. The redemption schedules on labour funds are killers. Even after five years you'd still take a 2.25% hit to sell out. (and Revenue Canada will make you repay all the tax credits if you sell out" within five years). 3) own other stuff first. Labour funds should be considered only if you already have a solid base of high- -quality, liquid investments. For now, the tax breaks are so rich, investors can do well by putting their money into a labour fund. But i that's not good enough. Look beyond the hype and choose a, good manager. In this, the riskiest type of equity investment, you'll sure need one. (RRSP Saturday Open House, Ken Richards, Fortune Financial Group Inc., 13 John St. W, Oshawa. For every $1,000. contributed to your RRSP on Saturday, Feb. 17th & 24th we will donate $10.00 to Simcoe Hall Settlement House in Oshawa.) 5 from INFORMATION Overload THINK RRSP ... Now! & For more information please call : ED LONG Contribute to your RRSP now to take advantage of the power of compounding. The sooner you start investing in your future, the sooner that future will be realized. = 4 16.7 15.0. 11.1 TRIMARK FUND performance as of December 31, 1996 PAVR STERIC BO IF 16.21, 15.04 10.9 MANULIFE SECURITIES INTERNATIONAL LTD. Suite 501 OSHAWA SHOPPING CENTRE (905) 728-7391 "All returns, audited by Emst & Yo historical annual rates of return and Ee a Tor om or administration A TRIMARK ; fees, payable by unit holders, which would have reduced returns. Past performance does not guarantee results. FRIMARK UNDS Your unit value and investment return will fluctuate. Important information about any mutual fund is contained in its simplified prospectus, hich should be youd caehuly bere Soovating Coples of She prospects wre amulet fom the WE MANAGE " financial adoisor listed above or from Trimark Iroestment ® Registernd ark of Trimark Inc. 1 Tina tort Msagihert TO OUTPERFORM.