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Page 8— Halton Hills This Week, Wednesday; October 14, 1992» PERSONAL LOANS 0% RATES SUBJECT gy TOCHANGE Gary Elliott “e municipal trust GEORGETOWN - 28 Main St. S. 873-4077 OXBOW (ETS BOOKS | (3 Published! JOURNALS OF LUCY MAUD MONTGOMERY Vol 3 - THE NORVAL YEARS $29.95 This Saturday October 17,2 p.m. at Oxbow Books meet journals editor Mary Rubio who will be signing copies and chatting about the author Phone 877-8861 fo reserve copies Also available: Vols. 1 and 2 ($29.95 each) Oxbow Books 877-8861 102 Main St. S., Downtown Georgetown SES WER SBI saan Sa Oye poet with this labile AE (Hamburger 1& Small Fries $299 tg Valid only with this coupon - Expires Oct 31982 r7z ~ “Check this out tonigh Medium Basic peerae ‘5. 99 ! Valid only poses ~ Expi pping oni. 7 idee feo Sor we oe Soe ged EIING rea SUBMARINE 10 Mountainview Rd. South, Georgetown 877-5177-8 Can you afford to buy Canada Savings Bonds? MONEY ) a J. Rockell IT'S YOUR planned to hold it for five ars. Last October the rate was 7.75 per cent (but probably six per cent or less this year) and with interest rates trend- ing down and no rate guarantee on the bond after year one, you may As regular as the leaves turning color! During the month of October, the radio and television stations are filled with commercials (paid for with your tax dollars) stressing the winders of Canada Savings Bonds. CSBs are unique investment instruments that are accepted unquestioningly. They are per- ceived to be guaranteed, no risk investments and they are purchased unwittingly every fall by many Canadians. However, risk is not overcome by simply allowing an investor to get their money back anytime. When you consider the three major changes that have been introduced by the government in recent years, you'll soon discover Canada Savings Bonds hold little appeal for the discerning investor. First, CSBs hold no minimum rate guarantee after the first year. In the past there were floor rates, but not now. There's no more built in protection from a drop in inter- est rates. Second, recent issues of CSBs have been priced less competitive- ly than other investment alterna- tives and even when short term rates change significantly during the year and Canadians start cash- ing their bonds, the government is slow and stingy in making adjust- ments. Third, tax reform has elimi- nated the $1,000 investment income deduction, making CSBs less attractive to investors who used that deduction to shelter bond interest from tax. They are now taxed from the first dollar of inter- st. Finally there is the effect of inflation. Lets say, for example, that you bought a $1,000 bond and only average five to six per cent for the five years. Lets assume inflation will aver- age three per cent over the next five years. In real terms that means your original $1,000 will lose three per cent of its value in true pur- chasing power each year. True it will still have a face value of $1,000, but it will only buy $858.73 of goods and groceries five years from now. Now lets consider the effect of income tax. At the tax rate of 41 per cent, which is your marginal rate with taxable income over $28,000, you will have only $59 out of every $100 in interest that your bond earns. If this year's rate is six per cent, the net effect of tax and inflation is that out if $60 interest per $1,000 bond, you will pay $1 in taxes and lose $30 to inflation, leaving you with a net gain of $5.40. In the lowest tax bracket you would be left with a bit more and in the high- er tax brackets , a bit less. ‘Many people buy CSBs on the payroll savings plan. Do you know that you have to pay approximately $22 per week for 48 weeks to buy a $1,000 bond? That's $1,056. You are paying interest to buy the bond with after tax money. Then the government taxes you on the inter- est the bond earns. ee rarely misses a tax opportut Are CSBs really a ane free place to put your money? I don't think so. What are the alternatives? Well, it depends on your investment objectives. If you are just going to cash in the bond next year to buy Christmas presents or head to Florida, many people don't bother checking alternatives. Money mar- ket T-Bill mutual funds are even more “le just as safe, and often earn m If sara are saving for the medium term, say five to 10 years, (maybe a house down payment) Canada Savings Bonds will yield very little real growth after taxes and infla- tion, it may take 10 years rather than five to reach your objective. If you are saving for retirement either inside or outside of an RRSP, you owe it to yourself to check out the many alternatives that will best suit you. If you are retired, there are excellent high- income mutual funds which could provide more income. Also, is you don't know what a Systematic Withdrawal Plan is, you should make it your business to contact an independent financial planner and ind out. If you are saving for future retirement or are already retired and facing lower income because of declining interest rates, it could be in your best interest to talk to an independent financial planner. He or she will have knowledge of tax saving alternatives as well as the availability of a variety of financial products from a good number of. financial institutions to tailor a cus- tom financial program for you. 1 of this without paying a fee for his or her time. Mostly inde- pendent financial planners earn their incomes from finders fees associated with financial products that you may buy. You don't have to accept their advice, but you'll receive some good ideas when you talk to one. = For more information, contact Peter C. Masson M.B.A., Regal Capital Planners Ltd. 10 Fagan Drive, Georgetown, Ontario or 6. is Chairman of Regal Capital Planners Ltd., a financial planning company with ffices from coast-to-coast, which has provided tax, retirements, insurance and investment advice to Canadians for 25 years. Announcement Rick West of West Insurance Ltd. has announced that West Insurance Ltd. has changed hands effective October 1st, 1992. Halton residents Roy and Mary Spriggs have taken over the 20 year old firm. Roy's 45 years experience in the insurance business includes a Halton brokerage called Spriggs Insurance Brokers Limited. Rick will be staying on as a consultant over the next 2 or 3 months during the transition. The firm will be known as Spriggs Insurance Brokers Limited 8 Wesleyan St., Georgetown 1A Spring Street, Erin 877-5113 833-7280 A