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MONEY TALK Wednesday February 13 1991 Page RRSPseason very appealing for investors Its been called the worlds greatest tax break as well as a great investment opportunity Its the annual New Year rush by Canadians to take advantage of the fact that money invested in an up to March can be deducted from the previous years income in calculating in come taxes The yearly season counts for a large share of all monies invested throughout the year according to Wayne Walker Sr Vice President Marketing of Investors Group The Winnipegbased com is Canadas largest distributor of mutual funds a favored vehicle for many Canadians While we counsel our clients to set up an ongoing investment program through a set monthly Plan ahead for retirement By ISABEL WEGG CLU What happens to your retire ment savings if you have to declare bankruptcy And what happens to them if the company to whom youve entrusted your savings goes bankrupt These are matters you should thing about carefully particular ly in these financiallytroubled times In the event of your own bankruptcy your RRSP or could be in jeopardy If your plan is with a bank trust company or investment dealer in most parts of Canada the law permits your trustee in bankruptcy to collapse your plan to pay off your creditors You could lose part or all of your retirement savings However if your plan is with a life insurance company it is pro tected from creditors so long as the insured persons spouse child parent or grandchild has been named as beneficiary So if your would like this extra measure of protection when you are shopping around among financial institutions for your next RRSP consider a life in surance company plan Or perhaps consider transferring your existing RRSP savings to a life company plan but make sure you name a family beneficiary On the other side of the coin you have to consider the safety of your savings in the event the company managing your should have financial difficulties The Canadian Life and Health Insurance Compensation Corp insures your savings with member life insurance com panies up to Thats the same deposit maximum offered by bank and trust companies that are members of the Canada Deposit Insurance Corp Comp ear also guarantees up to in life insurance policies and a month in disability in come Check if your life in surance company belongs to CompCor Over per cent of companies in Canada do With segregated fund RRSPs which are similar to mutual fund life insurance companies also offer a worthwhile guarantee Unlike mutual funds life in surance company segregated funds guarantee that not less than per cent of your lions wilt be returned when the contract matures or when you die Some life insurance company funds guarantee per cent This type of consumer protec tion is well worth your considera lion particularly in a time of any concerns its better to be safe than sorry If youd like more information about ask for our free booklet Planning for a Suc cessful Retirement You can obtain your free copy by writing to Planning for a Successful Retirement CLHIA Information Centre 20 Queen Street West Suite 2500 Toronto Ontario M5H3S2 You can also reach us toll free from anywhere in Canada by dialing 18002638099 or 2344 in the Toronto area amount there is great appeal in the fact that an investment made in January or February can be deducted from the previous years earned income Walker said This means either less in come tax to pay or a bigger re fund after youve filed your return He points out that while you will pay tax when you cash in your when you retire you must take out your RRSP at no later than the end of the year you reach age youll likely be in a lower tax bracket than during your incomeearning years In the long run youll enjoy both tax savings and the gain youll have realized on your in vestments Registered Retirement Savings Plans have become the chief financial instrument by which many Canadians supplement company pension or profit- sharing plans and the governmentrun Canada or Quebec Pension Plans and Old Age Security For contributions made up to March the federal government has set a contnbu tion limit of or 20 percent of earned income whichever is less If you are in a registered pension plan where you work or a deferred profit snaring plan the maximum contribution is or 20 percent of earned in come whichever is less minus any contributions to the employers pension plan Higher limits set The contributions have been raised in the past to reflect infla tion and in future years Ottawa will permit even larger tax- deductible contributions For this year the rules mean that if youre not in a company plan but nave an 1990 earned income of say you can put up to in an Thats because percent of would be which would put you over the maximum Assuming your family exemp tions put you in the 35 percent tax bracket a contribution would actually cost you only per cent of that amount with provided through the tax deferral Whats earned income Its the amount of income on which the government calculates your taxes your net salary or net business income minus any alimony or maintenance payments or business and rental losses There are many types of invest ment which qualify as an but the favorite of many Cana is a mutual fund A mutual fund is a fund In which deposits of a large number of peo ple are put into a variety of In vestments and managed by pro fessionals One of the main ideas behing a mutual fund is that theres less in diversifying your invest ment which can be hard for in dividuals on their own Wayne Walker said mutual says equitybased mutual funds are popular even though the stock market has been lacklustre the past year The recession depressed stock prices in lowering the cost of the average share he said As long term trends have always led higher over time the chance to build up investments when shares are relatively cheap is a very appealing one Cheaper by the half dozen and arc not taxed Anything less that a half dozen and GST is charged For details on this and other NC If you have a weakness fordo nuts cookies muffins cakes or other sweet pastries you 11 be better off buy six or more of each when you go shopping Thats because under the new Goods and Services Tax system when you buy these goodies they arc regarded as basic grocer peas of the new lax system call the GST Consumer Information Office toll free at I of a brochure called The Consumers Guide the GST and Prices Chances are neither you nor your financial institution will ever go bankrupt But if you have The Mutual Group BRIAN GOODLET 8775129 TONY SCHLEGEL HAL BARTON CARBER GOODLET 8775129 We can help you choose the thats right for you The Mutual Group has a full range of Registered Retirement Savings Plan investments Let us help you make the choice thats best for your needs For personal service call or drop in and see us el Th The Mutual Group Facing Tomorrow Together