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PAGE 14 â€" WATERLOO CHRONICLE, WEDNESDAY, FEBRUARY 26, Bank deposits versus bank shares (NC) â€" Most Canadians are savers. Very few are ‘‘*investors‘‘. There are literally millions of Canadians who save money, and leave their savings in banks. Some of us become investors by buying Canada Savings Bonds, which we feel is as "risky"‘ as we want to get. Some of us may even lend our money out on mortgages (to friends and neighbors, children, etc.). But . . . for each maybe 1,000 of us, there is one who becomes an inâ€" vestor. By that I mean that one out of a thousand chooses to invest in ‘"‘"owning‘* something, rather than ‘"loaning‘‘ our savings to a bank, trust company, mortgage, etc. "In 1952 my father retired from farming and had a house and roughly $100,000. He invested in Canada Savings Bonds and similar investments. Mother is still living and she has made similar investâ€" ments. A couple of years ago W. Rankin Hodgins of Alberta wrote Mr. A. White, a Viceâ€"President of the Bank of Montreal. The letter said: ‘"Now, instead of this type of inâ€" vestments, had father bought $100,000 worth of Bank of Montâ€" real shares, we would obviously be better off today. Can you tell me how many shares we wopuld have toâ€" day? If you can give me the diviâ€" dend history over that period it would be appreciated. I personally have 1,600 common shares of Bank of Montreal and 500 of your preâ€" ferred stock. ‘"‘Your help regarding the above would be most appreciated."‘ _ _ The answer from Mr. White stated: . .. In 1952, your father could have acquired roughly 3,400 shares, Bill Kavelman Chronicle Special If you have been laid off or forced into early retirement, any termination payment or retirin’g allowance you receive may be shelâ€" tered from tax. Under the Income Tax Act, a termination payment for loss of employment falls under the definition of retiring allowance, as does a payment in respect of unused sick leave credits. Accrued vacation pay does not qualify as a retiring allowance. Most, if not all, of a retiring allowance may be transferred to a Registered Retirement Savings Plan. The calculation to determine how much of your retiring allowance may be transferred to a retirement savings plan is a two step process. Every individual may transfer an amount equal to $2,000 for each year of employment. In addition, you may transfer $1,500 for each year that a contribuâ€" tion by your former employer to a registered pension or deferred profit sharing plan has not vested in you. No tax is withheld when you transfer the eligible portion of your retiring allowance directly to a retirement savings plan. When the transfer is not made directly, the tax withheld can be recovered when you file your personal tax return. Just to add to the confusion, the proposed minimum tax rules may subject a retiring allowance to tax even if the allowance has been transferred to an RRSP. When a resident of Canada reaches age 65, he or she is usually entitled to receive an Old Age Security Pension. Individuals who intend to claim both the married and age exemption for their spouse will find these deductions are affected by the Old Age Pension. However, if the person receiving the pension is under the age of 72 in the year of receipt, he or she can pay the benefits into a RRSP. This will result in a deduction that can reduce his or her income to an amount which does not affect the married exemption and restores both the Tax tips ‘86 which, after a fiveâ€"forâ€"one split in 1967, would be 17,000 shares today, with a current market value of $456,875 (at the closing price, October 30, 1983). In computing this value, we have not taken into consideration a further $410,093 of dividends that would have been earned since that time . . ."‘ Amazing isn‘t it? A share value of $456,875 plus DIVIDENDS of $410,093, making a total of $866,968. What about the $100,000 in bonds and in the bank. Those of us who are old enough to remember, know that Canada Savings Bonds were paying approximately 5% to 6% all the way through to the midâ€" 60‘s. We know we‘ve had some years above that, but on average, if 8% had been achieved over the 31 years, it means $8,000 per year X 31 years = $248,000 earned. Combine that with the original $100,000, and it gives a total of $348,000. By loaning the money to the Government, the father ended up with a total received, plus original investment, of $248,000. If he had invested in the Bank of Montreal shares he would have been worth $866,968. That‘s half a million more dollars. Are you a ‘"loaner‘‘ or an ‘"owner‘‘? For a tree sample of what savâ€" ings in S5â€"year term deposits have done over the past 17 years, versus what two different investment funds have done over the same period, ask for ‘"It‘s Your Money â€" the Choice is Yours‘‘ and write: Paul J. Rockel, 153 Union St. E., Waterâ€" too, Ontario, N2J 1C4. PAUL J. ROCKEL is President of Regal Capital Planners Ltd. and of the independent Investâ€" ment Funds Dealers Association of Canada. . .\‘ IT‘S YOUR 2A MONEY Paul J. Rockel Canada Pension Plan benefits are subject to income tax but there are ways to defer this tax, and in some cases to avoid it altogether through a special rule regarding RRSP‘s. If you are under age 72, you can contribute the amount you receive in Canada Pension Plan benefits to an RRSP. Although the total amount of such benefits will be included in income, an equivalent contribution made to a RRSP permits a deduction to completely offset the benefit. This deduction is in addition to the regular RRSP deduction which is related to the level of a person‘s earned inâ€" come. Income tax is deferred as long as the funds remain in the RRSP. When the funds are eventually paid in the form of annuity payments, up to $1,000 annually may be taxâ€"exempt because of the $1,000 pension deduction. There is a possibility that you may never have to pay income tax on amounts which have been transferred to a RRSP . married and age exemption to the spouse ADVERTISEMENT If you are 65 or over and have more than $1,000 of interest which is eligible for the investment income deduction, but you have no qualifying pension income, you have another option to consider. You can create pension income by acquiring an ordinary or unregisâ€" tered annuity. In this case, income from the annuity qualifies as pension income unless you elect to treat it as interest. As a result, having both qualifying interest and pension income provides you with up to $2,000 of taxâ€"free inâ€" come. The use of the pension income deduction, the investment income deduction and various rollovers of pension income and retiring allowances to RRSP‘s offer a variety of planning opportunities for certain taxpayers. Generally, contributions to an RRSP must be made by March 1, 1986 in order to be used as a deduction for 1985. However, a word of caution is in order. The Honourable Michael Wilson, Minister of Finance, will be handing down his second federal Budget this afternoon. A special purchase from the showrooms of planum wall systems in New York has enabled us to present the most phenomenal savings on wall furniture offered in North America. This is a truly remarkable opportunity to save on European, quality crafted furniture. _ "The Furniture Event for 1986" COME EARLY FOR BEST SELECTION, YOU WONT BE DISAPPOINTED (PLEASE BRING YOUR WALJl. MEASUREMENTS) New %rk Market Wall Units Wardrobes Fold Down Beds Library Walls Hiâ€"Fi, TV. & V.C.R. 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