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a Ry YY TIT el ha --_ PORT PERRY STAR - Tuesday, January 30, 1996 - 11 re or x aL From Page 10 children) on the contribu- tions you have given them is not taxable in your hands. A'"Topping Up" Example "oy Suppose your 20 year old daughter is currently earning $15,000 annually, which means that she can contribute $2,700 (18 per cent x $15,000) to her RRSP each year. Let's as- sume you make this con- tribution on her behalf each year until she reach- es 30. Assuming your daughter retires at age 65 and that the annual growth rate within her plan is eight per cent. On retirement your daugh- ter's RRSP would be worth $664,000 - even if she add- ed nothing to the contribu- tions you made on her be- half. Make a $2,000 Overcontribution If your adult children are still attending univer- sity or college they may have no income and there- fore will be unable to make RRSP contributions. Even in this situation there is still an opportunity for you to put some money away today to help them in their retirement years. Anyone over the age of 18 is allowed to contribute up to $2,000 to an RRSP in excess of their regular con- Possibly the only thing The g ift of retire tribution limit, without penalty. The overcontribution is not deductible from either your income, Or your childs. At some future date, however, the child can claim the over- contribution as part of their deductible RRSP contribution limit and benefit, eventually, from the tax deduction. The im- mediate benefit, though, is that as soon as the mon- ey is invested it begins the compound tax-free growth that forms the foundation of your child's future re-. tirement fund. Consider this, a $2,000 . over-contribution to a 20 year old child would grow to almost $64,000 by their retirement at age 65, as- suming an eight per cent growth rate. The Benefit of Tax Free Compound Growth Both of these options represent relatively inex- pensive methods of assist- ing your children with their retirement planning. At the same time they al- low you to pass a portion of your estate to your chil- dren today. The alterna- tive would be to keep the capital in your hands and invest the money, ulti- mately distributing the capital from your estate. Let's look at the figures, once again, using the "top- worse than dying is outliving your money! Planning for Bl carn how to structure your investments Join me for a Bl Develop a retirement plan Bl Identify investment trends - IW Use diversification for safety Thursday, February 8 7:00pm to 9:00pm at the Scugog Memorial Library Call 1-800-252-8565 to register FORTUNE Marilyn Goodhand Admission is complimentary. Reserved seating only. Complimentary workbook to attendees. FINANCIAL Retirement Workshop : 8&15 Whitby: 665-1651 ping up" strategy to make our point. In our "topping up" example your child's RRSP would be worth $97,000 in 20 years time. This child would have also benefitted from approxi- mately $22,000.0f accumu- lated tax savings from these contributions. If you were to invest the money in your own account, it would grow to approxi- mately $54,000 over the same period. This as- sumes an eight per cent annual growth rate and a 50 per cent tax bracket, and that you are already maximizing your RRSP contributions. Even if the $97,000 were withdrawn from your child's RRSP in the 20th year it would still be worth $48,500 after-tax (assuming a 50 per cent tax rate). Once the accu- mulated tax savings are factored in, your child would have $16,000 more than if you held it in your hands for that same peri- od. If the child were to leave your gift within the RRSP until retirement it would grow to the $664,000 mentioned earli- er - very welcomed seed money for their retire- ment fund. A Small Gift Can Make A Big Difference The previous examples illustrate how a relatively "Independent Investment Advisor es eaten ons oe 3% 2% I NAR nS et ee Beason Rit errant a merit modest gift can provide a substantial amount of re- tirement capital to your children. But remember - there is no guarantee. Once the money is in the child's RRSPitis no longer yours. Your children can invest it in any way they choose, even withdraw it. If you are comfortable with this possibility, then it is within your power to pass some of your good for- tune on to your children, building the foundation for a retirement as com- fortable as your own. Courtesy of, Richardson Greenshields, Oshawa ACCOUNTING - Computerized Accounting SERVICES Training, (Accpac Plus, Simply Business Visions, Quickbooks Betty Penny, Principal Accountant & Lotus) Patrick Fortune, Assoc. Accountant - Management Consulting - Part-time Controllership 180 Mary St., Port Reery Ons o LOL 1C4 - Personal & Corporate Taxes - Temporary Bookkeepers Phone (905) 9850712 - New Business Set-Ups Toll Free 1°800°699°6190 - Mobile Service Fax (905) 9859461 Competitive Rates COURIER SERVICE CANPAR DEPOT AN AT THE GificeCentre 188 Mary St., Port Perry 985-7383 I year Compare these returns with your GIC, S year Looking for a secure investment? A GIC fills the bill. Looking for preservation of capital and superior returns? Historically, GICs have come up short. For more than 15 years, Mackenzie's Industrial Income Fund has been the choice of return and safety conscious investors. As advisors, we believe the Industrial Income Fund portfolio -- combining government and corporate bonds and selected equities -- is a timeless investment solution. For more information on this and other income- building investment opportunities from Mackenzie, please call us today at the number below. Building Financial Independence ROBERT J. GOW 111 Simcoe St. N. Oshawa, Ontario LIH 7M9 Phone: (905) 434-7156 1-800-267-1522 Important information about this offering is contained in the Fund's simplified prospectus. Obtain a copy from us and read. it carefully before investing. Unlike GICs, mutual fund investments are not guaranteed. The indicated rates gf return to December 31, 1995 are the historical annual compounded total returns, includi in unit value and reinvestment of all distributions, and do not take into account sales, redemption or optional charges payable by an investor which would have reduced returns. Past performance is not necessarily indicative of future returns. Is Preparing Your Tax Return a Hassle? Come to H&R Block. We'll get you the maximum refund you're entitled to. | Because it's your money. 174 Perry 8t., Port Perry H:R BLOCK 985-9803 THE INCOME TAX SPECIALISTS since inception S year 10 year a ak, oh ERAN hp Sept. 1974 changes hg Vom re i My to Cr AR on