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BEST AVAILABLE THE HERALD II Money Matters Mutual funds investment suggested Many prospective investors are scared away from the investing in equities or common stock of corporations because of the fact that these shares are traded on the stock market with all of the perceived risks involved With the crash of October and the more recent decline due to the crisis In the Gulf still fresh in their minds they look for safer more conservative in vestments The answer to their financial planning needs is likely to be mutual funis Consider the following story In the summer of 1987 investors lost millions of dollars when the Ed monton based financial empire of The Principal Group collapsed Many Investments such as deposits and Investments including which are usually insured up to a maximum of by the Canada Deposit Insurance Corporation CDIC were not covered However investors who had mutual funds- managed by The Principal Group escaped with their money intact even- though mutual funds like stocks and bonds are not eligible for protection When Principal col lapsed a life insurance company took over management of the fund It was business as usual This is one of the attractive strengths of mutual funds If the manager of a mutual fund gets in to financial hot water or even goes bankrupt the investors money is still protected In the case of the Principal failure new managers picked up where the previous ones left off With mutual funds managers do not own mutual fund shares MONEY Paul J Rocket the investors do That is the heart of mutual funds security Other assets cash stocks bonds and securities are held by a custodian institution usually a bank or trust company Managers buy and sell securities but these assets are not acquired for themselves Since the funds port folio of investments belong to the investors the fund managers cannot claim these assets as part of their company As well the managers cannot use these assets to support their own com pany Investors may wonder how their investments are managed Openend funds which allow in vestors to invest or withdraw their money at any time are usually run at corporations trusts or as in the case of in surance companies as variable life policies For tax purposes mutual fund trusts pass to in vestors all Canadian dividends interest capital gains and foreign income less expenses Likewise mutual fund corpora tions also pass on to the investor all dividends and capital gains but are not allowed to forward in terest and foreign income since they are taxable in the hands of the fund However mutual fund corporations can cut their liabili ty by charging expenses against this interest and foreign Income Accountability is another at tractive feature of mutual funds Mutual fund corporations must hold annual meetings Although mutual fund trusts are not re quired to do this they still must issue detailed annual and semi annual reports Some issue quarterly statements Fund prices are published daily in the major newspapers This arms length relationship between managers and their mutual funds is one of this in vestments strengths Not one dollar of investors money has ever been lost because of management bankruptcy That is one of the reasons why hundreds of thousands of investors choose mutual funds But is security costing you money A totallyinsured guaranteed investment cer tificate may between and per cent per year However the rate of return of many mutual funds is often considerably higher some have averaged per year over time If held out side of an RRSP it is a more at tractive investment after tax Over the long term mutual fund investing can be much more pro fitable There may be some risk in the underlying investments in a mutual fund due to short term market fluctuations But ask any former client of The Principal Group in the long run investing in mutual funds may be better than money in the bank For a free booklet on vesting and a chart comparing the performance of an actual mutual land with a 10 Invest ment over the last 23 years con- By ANNE Thomson News Service Popular wisdom is often not wisdom at all Take the notion that war brings prosperity This may be true in a war of conquest where the win ner seizes the losers wealth the way Iraq seized Kuwaits treasury arid oil fields for exam ple Germany no doubt would have prospered had it conquered the world But a war where no spoils are won like the Second World War the Korean War or the Vietnam War and the war in the Persian Gulf bleeds a nations resources Wait a minute you say Didnt the Second World War pull us out of the Great Depression Not ex actly To think that war is good for the economy is idiotic says Philip Cross chief of current analysis at Statistics Canada in Ottawa I fail to see how blowing up your human and physical capital can ever be good for you Mr Cross said in a recent interview with The Globe and Mail I asked him to explain SPENDING KEY Government spending led the economy out of the depression he said One of the ways govern ment can spend money is war Its not the most productive way One need only think of recent events to realize that war does nothing for the national budget balance Government agencies and departments have had to trim their spending to help finance Canadian presence in the gulf If war breaks out and is pro longed it would add to the federal deficit There are millions of ways government can spend money on people Mr Cross pointed out Killing them off is not the best way Part of the reason we think war brings boom times is that wars are inflationary Inflation as we are teaming is illusory wealth During the Second World War the federal government managed to contain inflation by forcing people to buy bonds Had it not done so inflation would have skyrocketed and the boom turned to bust As well the economic effects of war depend on the war itself Mr Cross said The Second World War did not cause oil prices to double It was not war but government spending that brought the depres sion to an end he said Other in itiatives would have done the same thing Digging ditches filling them up again all this would have helped without the longterm cost of blowing up human and physical capital Today prosperity is nowhere in sight the Statscan economist said I cant find anything good to say about the economy at the moment HR Block stands behind its work We guarantee your satisfaction And our experience in preparing complete and accurate tax returns will give you peace of mind HR Canadas Tax Team Put uto work for you Under Ownership In A New Location 8737855 7 JAMES STREET Off Main St Downtown George tact Peter C Mason Regal Capital Planners Ltd 10 Pagan Drive Georgetown On tario or phone Paul J Rocket is the author of the bet teller Why In Invest In Mutual Funds and President of Regal Capital Planners Ltd SAME DAY TAX RETURNS 10i Guelph St Georgetown 8772217 War does not bring prosperity FINANCIAL GUIDE BLOCK j Canadas Tax Team Put us to work for you New Ownership tn A Now Location TAX TALK of mm mock the goodi and services tax credit was supposed to replace the fedora sales tax credit but looking my 1990 tax return package see that there are forms for both Which form should I complete A You should complete forms Is the last year for which you may claim the federal sales lax credit The calculation is on Schedule 7 In addition to this form you must also complete form GSTC and file It with your return in order to receive the goods and services tax credit that will be paid in Instalments in July October January and April 1992 If with your return you did not apply lor the goods and services tax credit payople In respect of the first port of 1991 and yau qualified or it It is not too late to do so nits Computer Dala Services MAIN ST S GEORGETOWN 8776565 Tax Planning I Consultation Accounting Bookkeeping Financial to lament Preparation GST Advice JOHN A GIBSON CHARTERED ACCOUNTANT Georgetown 8770807 At PUZZLED ABOUT YOUR FINANCIAL FUTURE We Can Help Make All The Pieces Fit- Goebeile Alexander Chartered Accountants WITH THREE IOCATIONS TO SERVE YOU GEORGETOWN BRAMPTON MISSIS3AUOA 37 Main Si South 18R0anRd Rd Daniel Varanelll Certified Accountant Personal And Business Returns Accounting and Bookkeeping Semen Financial Statement PiepaiatiM Seivices GST Sales Tax Consultation he SMtSlMMiiiSi SSS THMSPOTn RESE FOR Call our display advertising toddy we will get your message to natters