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SECTION C THE HERALD Wednesday II Page J RRIFs can make the most of your retirement savings by Gary Rogers Retirement planning does not stop when your matures ax especially now that the gov ernment is encouraging us to take more responsibility for our gold en years One vehicle that has become especially attractive over the past two years is the RRIP an exten sion of RRSP that allows you to further spread out your tax load to age When your matures you simply roll it over into a RRIF a registered retirement income fund at your credit union trust company of bank The financial institution will continue to invest that money and pay you a rale of return that is as good as the rale From then on most of the choices are up to you You can continue to choose bow your funds are to be invested for ex ample in a term deposit or a savings account just as with an RRSP You will also have access to money in your RRIF any time you choose but you must pay income taxes on the amount you lake out based on your lax sum you withdraw each year is up to you but you must always draw a minimum amount That sum is determined by a for mula that is based on your age and the number of years in the life of the The formula works the following way sub- tract your age from 90 and con vert to a fraction then multiply the fraction times the total funds in the RRIF at the beginning of the year For example a 70year old with in the will have to withdraw a mini mum of 120 Beyond this you can lake out as much as you like For example you can arrange to take out larger sums in the early years if you plan to do some extended travell ing then cut down the payments later if you think you will need less money But if you are not careful this could leave you short of funds later on Gary Rogers is Taxation Ad visor for the Canadian Co operative Credit Society For more information about write to Credit Union Financial Counsellor CCCS the East Mall 5th fl Isling ton OnL What Guarantee in guarantee is terrible ITS YOUR MONEY When it comes to putting our savings work we Canadians guarantee conscious If its guaranteed by CDIC Canadian Deposit Insurance Corpo ration put my savings there is something most of us say Or Ill place my savings in a guaranteed year term deposit or Guaran teed Income Certificate Is your amount guaran teed It certainly is although the rate of return is not as thou sands upon thousands of investors have discovered in ihe collapse of several trust companies Principal Group and Principal being the latest andacouptcofbanks Those with CDIC insured deposits got their money back but not the earnings they had Is there a guarantee in the guar antee that nobody tells you about I believe there is Inflation has always been with u We read in the good book thai a person worked for a penny a day which was an acceptable wage back then When I started working t years ago it was at per hour with very few people earning per year What does inflation dn to our guar antees It erodes the purchasing power of those dollars When this article was being writ ten final tally as to the costofliving increase for but it was presumed to be somewhere in the neighborhood of to John Templeion man ager of the Growth Fund recognized as one of the most outstanding finan cial experts of our lime having been the financial world for the past 44 years says inflation over the next decode years will probably average per year some years being over 10 others less I cer tainly hope hes wrong What if inflation were only to average per next 12 yean This means the cost will double in that 12 years What if you had invested 1 in a guar anteed investment during those yean spent the earnings as many of us do and now took out thai It would buy the equivalent of worth of goods at the lime you invested it And thats guaranieed Yes a guarantee that preserves your principal docs NOT guarantee thai your principal will buy as many goods or services at ihe end of the guarantee period inractduetoinfla- virtually guarantees you will lose purchasing power in the illus tration above you lost half your pur chasing power value Second problem with guarantees is that the rate of return is usually paid out as interest which fully tax able So if my total gain is 1 and J lose to inflation and to taxes m the 50 category I end up with no real gain Whaicanyoudoaboutit Well I use equity mutual funds where past performance has shown 1 should average in good fundi at least averages per year and fund only does I only have gam left Buithankstoihecapltalgaini ho of 1 00000 and the fact divi taxed very total tax bill on thai would only be or even in the 50 Take that away from the and I have or increase in purchasing power each year Thats a lot belter than a virtually guaranieed nothing PAUL J author of book Why I In Mutual Funds and fa Prwldanl of Capital Ltd- a comparison of what a mutual fund has dona In comparison with tha past yaars for Houaa vs funds and write Paul J Rockal Raoal Finan cial Csntra Union SAME DAY TAX RETURNS KM Let Us HELP You PLAN The MOVE To Your NEW HOME BILL Sain Rap 171 over 20 years HOW DOES TOUR COMPARE industrial GROWTH AND SHORT OF It 1YR 1L7X 3YR 154 SYR 10 169 20 171 Be honest Over the past yeais have your invest ments come close to Industrial Growth Funds 171 average annual compound return Very fewif any investments and investment fund have Over the past 12 months alone after one of the worst declines in history for the stock market- Industrial Growth Fund was up a full 1L7JS And the professional managers at Mackenzie Financial are very optimistic about the future So why settle for less than industrial Growth Fund For full information call PETER CMASS0NMBA REGAL CAPITAL PLANNERS LTD Drive Georgetown Ontario 4P3 8777216 All figures to December 31 are average annual compound returns based upon the net amount invested and include reinvestment of dividends Rates of return are calculated before deduction of RRSP administration fees maximum per year Past performance is not necessarily indicative of future results A ny offer made only by prospectus which contains complete details of all charges Please read it before making your purchase and retain for future reference The Industrial Group of Funds Looking both ways To manage your RRSP Better