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f you have fo‘t g n _ investments within your RRSP â€" be careful. You could end up to be over ~the 18% foreign _ content limit and have to pay a penalty. For example, we will assume that your RRSP was $100,000. You had invested $17,000 or 17% . _: into. > an international equity mutual fund. To your delight, he $17,000 increased to $30,000 while we assume the C a‘n a d i a n mp o n e n t a o1 noeod inchanged. At this point, your foreign Fontent is still elow the 18% limit because the calculation is based n book value, not narket value. But then .you gcide to sell your 30,000 investment purchase bunother _ foreign nvestment. And is is where the The new $30,000 preign investment jill have a book 3 RLINGTON asture +REALTORSâ€" OPEN HOUSE SUNDAY 2â€"4 307 WILLIAM STREET 357,000. Historical bungalow in downtown core, near shopping and just steps to lake. principal rms. with open concept iving rm. sep. dining rm. 2 bthrms., main laundry and beautiful large fam. rm. ith heatilator FP and w/o to grdn patio. ‘reâ€"Christmas poss. Must be seen. Call ARRY TWELLS, Sales Rep., 825â€"8806. =7.4 5Je [ REALTY 95 BRANT STREET 639'269 Independently owned and operated ROLLING COUNTRYSIDE! 70 yr. old totally renovated, 10â€" om home on 35â€"1/2 acres with ponds, creek, 90‘ bank barn, land and farmland. C all INNINGTON (res.) 634â€"0272. h o n y value of $30,000 and, therefore, you will be over the 18% limit. The penalty tax is 1% of your excess per month and your RRSP trustee might take several months to notify you. In addition to this, there is another more subtle way you can exceed the foreign limit. When the mutual fund distributions are automatically reinvested, increases your book value. A simple definition of book value is â€" it is the original cost plus any distribution that you would receive. Foreign content limits are based on book value. . If your foreign investment mutual funds have higher distribution than your _ Canadian mutual funds, you will be gradually pushed above the LIMITED BARB $ 4 18% limit. The solution to this potential problem is simple. Leave a small buffer between your foreign content and the legal limit, plus monitor the foreign content level. ~ If you think your RRSP is safe because you do not hold foreign investments then I recommend you reâ€" think your strategy. In most cases, you should have some of your RRSPs outside of Canada. There are two reasons for this. The first has to do with safety. Canada is a very small country that accounts for less than 3% of the w .0 L. ds investments. The first rule of investing is to balance and diversify your in we s t me‘nt portfolio. And that includes geographic diversification outside of Canada. This is not an antiâ€" Canada statement, but a financial planning reality. The final reason to invest internationally is to increase your return. History has shown that you can often get superior returns by investing internationally. So, good luck with your foreign RRSP investments and make sure you watch that you stay OPEN HOUSE 297 SUNSET $237,900 SUN. Nov. 14 2â€"4 p.m. 56 STEVENSON $249,900 SUN. Nov. 14 2â€"4 p.m. ADVANCAGE "â€"us REALTY INC. Phone 844â€" 700 Dorval Drive, Suite 103, Oakville, Ont. c D â€" Vaulted family room â€" Circular oak staircase â€" 60 foot lot Mon.â€"Thurs. Sat. Sun. MASTER BUILDER THE SUPTON _ $281,500_2425 SQ. FT. WALKERS LINE 1â€"6 p.m. 12â€"6 p.m. FRL CLOSED smm 332â€"9155 â€" Library â€" 4 bedrooms COUNTRY CLUB DR. APPLEBY LINE within the legal limit. Peter Watson, MBA, CFP, FRP is the president of Peter Watson Investments Limited â€" an OQakville firm specializing _ in riectiâ€"reâ€"m e‘nt planning, RRSPs, and _ investment planning. He can be reached at 842â€" 7602. gelp it U Thgmltod Way o# « O 2075 BANBURY CRES. Alterra built â€" Excelusive location â€" Well priced. nA ¢ r OPEN HOUSE SATURDAY, NOV. 12/93 SUNDAY, NOV. 13/93 2 P.M. TO 4 P.M. ® XT MOVE CALL TODAY" Â¥ 4 + GRACE CERESA 842â€"7000 €661 ‘TT ‘Aon ‘KepHd YIAVA€ ITIIAMVO 4HJ.â€" JÂ¥ t