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MONEY TALK Wednesday February 1991 Page Patience a virtue in mutual fund investing Note This is an article written three years ago bat in light of current economic conditions bears repeating What is the most important item to realize if you choose to in vest in mutual funds Did you answer rate of return If so you were wrong We that the rate of return over the long term of good equity mutual funds have proven them to be a sound investment Some have averaged or better over time But that doesnt mean they will average 15 ever year Some years there will be gains of or even 35 other years there will be very little gain and some as in 1990 a loss It is our belief that in every 10 year period there will be a minimum of two or as many as four poor or negative years Nevertheless we believe that mutual funds have a public record of giving the best return of any type of commonly available investment where your assets are looked after for you We admit that if you were smart or lucky enough to invest in the right stock or that special piece of real estate or the game of Trivial Pursuit you would do better But how many of us know about those special situations and even if we do after we take our profit is the next investment going to win or lose for US Here is a true story about a mutual fund investor who in vested in June 1973 We 11 call him Mr Patience Now for comparison well use an im aginary Mr Scared who made the same investment at the same time Both and were down years in equity markets another recession Both Mr Scareds and Mr Patiences value fell Their values fell from to around by December 31 Needless to say both were com dissatisfied with the in vestments can you blame them- Mr Scared decided that he was going to cash out despite being advised against it by his financial advisor He cashed out Mr Patience also wanted to cash out but he listened to the ad vice to stay in the fund and he did Later when the fund value returned to he originally invested he wanted to cash out again but again he listened to the advice of his financial planner who advised against it and left his money in the fund A little over four years ago or 52 months Mr Patience retired and said that he wanted per month sent to him from his mutual fund Its called a monthly withdrawal plan and as this money was not in an RRSP It was taxed very lightly because Mr Patience still had his capital gams deduction If the money was in an it would have been taxed as income By the end of 1987 he had received in monthly che ques monthly times 52 months and the remaining value in his mutual fund account was ITS YOUR MONEY Paul J Mr Scared on the other hand cashed out his at- the end of 1974 he bad invested Lets suppose in the years to the end of 1987 he had averaged 12 interest at the bank It would now be worth 214 Of that would have been taxable interest and if he was in the 30 tax level it would have cost him in taxes 74107 if he was in the 50 tax bracket In answer to the question at the top of this article I think we can say that time or patience is the most important element in mutual fund or most other forms of investing We should look at a mutual fund as an investment for a minimum of five years preferably a lifetime as Mr Pa tience has despite the fact that you can retrieve your value at any time The above story about Mr Pa is true How many would do what the imaginary Mr Scared did I think youll agree patience was well rewarded Yes I think we can say that pa tience has its virtues in mutual fund investing For a free booklet on mutual funds In an and a chart comparing the performance of an actual mutual fund with a 10 in vestment over the last 23 years contact Peter C Masson MBA Regal Capital Planners Ltd 10 Pagan Drive Georgetown On or phone 8777216 Paul J Rocket Is the author of the best seller Why Invest In Mutual Funds and President of Regal Capital Planners Ltd Turn on and reach out for less Turning on and tuning in won cost as much under the new Goods and Services Tax system Because the new 1 consumption tax replaces an 11 federal telecommunications and pro tax your local cable lelevi sion company is in a position to pass along a tax saving Under the same tax change over reaching out and touching someone won cost as much either You can expect your long tance bill to fall by although the 7 GST will for the first time be added to the cost of basic telephone services For more information on how the GST affects call the GST Con Information Office toll free at I and ask for a copy of The Consumer Guide to the GST and TIME Is On Your Side Enhanced Interest Rates Easy To Start IE Instant Tax Receipts Professional Advice g Creditorproof No Hidden Costs Vf RRSP Eligible yf Conveniently Available Direct Payment vf Ease of Transfer With An Allstate RRSP The Investment that gives you the advantage of guaranteed attractive returns with absolutely f THE RATE THIS WEEK ANNUAL NUMBER OF YEARS TOTAL DEPOSIT ACCUMULATED HERES HOW 5 5000 TIME CAN WORK FOR YOU 1000 10 15000 34950 1000 20 20000 in lung 1000 25000 I in me Tins i illustulc in mvrv mint of 1 30 1000 35 35000 298127 iincrntt 1000 FOR ILLUSTRATIVE AND IS A GUARANTEE Ask Gerry how you can benefit from our other com petitive advantages instate GERRY MAIN STREET NORTH GEORGETOWN