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Page THE HERJUD Wednesday 16 Money Matters- Optimists have chance to be right It is hard to be optimistic about the stock market yet some Wall street forecasters are Their bullish predictions ignore the January effect the notion that when it comes to stock prices as January goes so goes the year Unscientific though it may be the popular barometer does not augur well for stock prices In the first three trading days of the Dow Jones industrial average lost more than points This didnt faze the optimists one of which is economist Ed Yardeni of prudential Securities in New York Despite the recession he still thinks the Dow Jones average will rise to some time in 1993 now That would be a gain of nearly per cent Another is Elaine Garzarelli of Shearson Lehman Inc Like Dr Yardeni she thinks the New York market hit bottom Oct 11 and is poised to take off Ms Garzarelli is worth listening to She called the stock market crash of October 1987 VAIN HOPE How are these people to be right Well the optimists record over the past year has not been good Dr Yardeni did not foresee the swift economywide recession that struck North America As one US forecaster put it the economy fell off a cliff in the fourth quarter Also both Dr and Ms Garzarelli work for companies that sell stocks so their soothsaying may be tinged with unwarranted hopefulness Dianne Matey YowButiDMS Still because of their belief in laissezfaire capitalism the two Wall Street forecasters have a good grasp of what is at stake in the current financial crunch With the collapse of communism in Eastern Europe Dr likes to boast that Adam Smith has won the day Adam Smith an 18thcentury Scottish economist is the intellectual father of the freemarket economy But if the current recession triggers a financial panic or if the slowdown turns out to be deeper and longer than govern ment policymakers expect Adam Smith and the market economy could be thrown out the window Laissezfaire capitalism could follow communism to the grave A new more regulated economy would take its place Given the high stakes the op timists have a fair chance of be ing right at least for now If they are an impressive amount of money stands to be mnade In the stock market Ms Garzarelli thinks the Dow will climb to 3185 this year for a gain of roughly 25 per cent Two things have to happen first she told the Financial Times of Canada The uncertainty in the Persian Gulf will have to be favorably resolv ed And the Federal Reserve Board the American central bank will have to ease its grip on monetary policy once more STRONG CALL In the meantime the stock market could continue to drift sideways she said Even so anything below is a gift She has put her money where her mouth is investing the million US portfolio she manages in stocks The two other times she plunged confidently in to the market were in and 1974 Which groups will outperform the market Leisure newspapers airlines truckers semiconductors electronic com ponents and home builders she said In the past these groups have risen by per cent from their cyclical lows If you bought those groups right now youd be buying them per cent below the equivalent Dow level So even if the market has this little correction youre not going to get hurt much in these industries Youll be gain ing per cent to loo per cent oyer the next year she said Some words of caution The forecasters are talking about the Dow Jones industrial average Canadian stocks may not per form as well As for timing it may be prudent to wait until the Persian Gulf crisis is resolved if indeed it is Different types of By ISABEL Once again were being flooded by advertisements urging us to buy Its that way every January and February as finan cial institutions of all types trumpet their postChristmas glad tidings of tax deferral and retirement savings The message You have until the end of February to make an RRSP investment that can be deducted from your 1990 taxable income Dont delay Act today The reminders are timely The advice is good Every income- earning Canadian should at least consider the tax and retirement benefits available through All RRSPs are the same in two respects They reduce our im mediate income tax burden and they provide a tax shelter for our savings to accumulate for future retirement free from the tax- mans- bite The tax savings can total many thousands of dollars over the years depending on your tax bracket However in other ways are as different from each other as chalk from cheese One will invest your money at prevailing interest rates Another will put it into stocks or bonds Yet another offers a mortgage or real estate fund There are many different types some offering in come and safety others growth and higher risk It pays the RRSP buyer to choose carefully among them Longterm results can vary by tens of thousands of dollars They can make the difference between and continuing financial struggle in old age Chances are youre too preoc cupied with your career your family and your other interests to do the research you really should do before buying an Thats why I recommend you get professional advice from so meone who knows about these matters a life insurance agent In the privacy of your home or Reading between the lines How many times have you found yourself roaming through me classified ads not actually in search of that unbelievable purchase but rather just to see how vivid your imagination could really be The real estate section provides a great opportunity for the reader to test hisher imaginary skills Unfortunately it also provides the realm for many agents lo explore their literary expertise Rather than reveal ing their creaUve lalenls they often display their inability to communi cate Weve all read the classics handy man special and close to transporta tion meaning backing on to the rail way tracks or a four lane highway Does It wont last long mean that the house is about to fall apart I cant see that attracting anyone Another classic is the headline Owner Must Sell I thought salespeople were sup posed to work on behalf of their ven dors In essence classified ads are sup posed to be the method of communica tion through which potential buyers gain the necessary initial information on various properties Buyers need to REAL ESTATE AND YOU Jamie Johnston know the specific price or price range the neighbourhood or area and the number of bedrooms All other is secondary at that particular point m time Rather than relentlessly searching through the classified ads yourself you may consider looking for a good sales person who can in turn look for the buy The salesperson earns their money via their ability to identify buyer needs and then match these to whats available in the market place It makes more sense to have the sales person running around while you view the best or 4 homes available Theres no obligation to you while youre looking so why not take advan tage of the services of an expert Fora free copy of our How to Buy a Home brochure call or visit Trust Real Estate branch near you office your agent will review your finances and retirement ob jectives with you and help you make a knowledgeable choice all without obligation Your agent can explain the many types of plans available from those of banks trust and fund companies to those of life insurers Youll find out the advantages and disadvantages of each in cluding how to creditorproof your plan and how to get a retire ment annuity at reduced rates through a life company RRSP If you want to do some homework in advance of meeting with your agent contact us for a free booklet called Planning for a Successful Retirement You can obtain your free copy by writing to Planning for a Suc cessful Retirement The CLHIA Information Centre Queen Street West Suite 2500 Toronto Ontario M5H You can also reach us tollfree from anywhere in Canada by dialing or in the Toronto area Isabel Wegg is vice- president communications of the Canadian Life and Health In surance Association The CLHIA represents virtually all of Canadas life and health k In surance companies and is the central source of statistical and other information about the In dustry This column is produced as a public service by the The Ontario Federation of Snowmobile Clubs Reminds you to STICK TO THE TRAIL and have an enjoyable and sale season Basic financial facts of life Weve said it before and we will continue to repeat some of the basic financial facts of life The basic formula for financial success is Time plus Money plus Rate of Return We find this formula written in a book The Working Life of a Dollar by Sam Jr What most people dont realize is one of those three elements is far far more important than the other two All of them are very important and in relation to one another help build a sound finan cial future But by far the most important element is Time A friend of mine illustrated this to me the other day with a ques tion He asked Supposing there were two twins each IB years old working and one decided to save per year at 15 per cent which has proven to be available through mutual funds for eight years and then quit saving but left the dollars until age The other twin only started saving at age 26 and saved per year right through to age Who would have the most value at age was the ques tion Would you know My guest because I know the formula T plus M plus with T time being the most im portant was the fellow who started saving early but for only eight years Youre right he said Why dont you go home and work out the figures 1 I did I was absolutely amazed The young twin who started saving at age saved a total of over the next 8 years My calculator tells me that per year times per cent times 8 yhears gives me a value of Work it out on your calculator and see if you get the same By this time the young twin would be 26 years old If he left that 3157168 to work at 15 per cent through to age without adding another penny hed end up be ing worth I couldnt believe it I worked it out three ITS YOUR MONEY times and then took another calculator and reworked it The answers were all the same Hed saved 16000 but now it was worth over million at age What about the other twin He started saving 2000 per year at age 26 and did so for 39 years at per cent He saved a total of but his value was His value was million less despite the fact he had saved 62000 more What is the secret that created over double the value despite the fact that 62000 less was invested Its time For Twin No 1 the first 2000 at age 18 worked years the second worked for years etc and when lie stopped saving at age the total value worked another 39 years Twin No on the other hand had his first working only 39 years etc What if the twins had both just used a savings account at 10 per cent for their savings No 1 would have had a value of vs at per cent and twin No 2 who saved for 39 years would be worth vs at 15 per cent Time plus Money plus Ra te of Return The magic formula for financial success All three in gredients are important but TIME is by far the most impor tant Whether you are or 70 start saving and investing today You cannot buy yesterday back For more information contact Peter Masson MBA Regal Capital Planners Ltd 10 Fagan Drive Georgetown Ontario or phone 8777216 Paul J is the author of the best seller Why I Invest in Mutual Funds and President of Regal Capital Planners Ltd Hey Love why dont you Call Country Lane tonight reserve our movie for Friday at the same time order a Pizza we get the movie FREE 8776767 8772254 DRIVING SCHOOL JAN 14th FEB MONDAYS A WEDNESDAYS PM Christmas Gilt Certificates Now On Sale For Information About Courses or Private Lessons ELECTRONIC SERVICE MY FREE Ml OH PREMISES BY FOR THE BEST SERVICE AT THE BEST PRICE CAIL i GEORGETOWN CUSTOM CAR SOUND HP