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8a- PORT PERRY STAR - Tuesday, Sept. <7, 199+ "Scugog's Community Newspaper of Choice" Get a financial plan Financial planning is an area that typically receives very lit- tle attention. If you haven't got a structured plan, you're not alone, few people actually spend time planning and evalu- ating their financial commit- ments and decisions, often until it's too late. In today's volatile economy, we encourage our clients to give some thought to their financial security. While you may feel that you have a good grasp on your fiscal needs. have you drafted a contingency plan in the event of an emergency? The following case study brings to light some financial planning issues that you may or may not have considered. Dealing with job loss Michael and Colleen are a married couple in their early 40s. They have two children, a mortgage that will not be paid off for another 20 years, and a new five year car loan. They have a large credit card bal- ance. Colleen has just been given a golden handshake by her com- pany. She has been offered a buy-out of nine months salary which she can take either as sai- ary or have it deposited directly into an RRSP. If she starts ajob within the next nine months. Robert J. Gow Be Financially Prepared For The 90's ROBERT J. GOW 434-7156 or 1-800-267-1522 RICHARDSON GREENSHIELDS Investment advisors to Canadian enterprise and enterprising Canadians INDUSTRIAL DIVIDEND FUND LIMITED dividend tax credit. ments, call me today. The Industrial Group of Funds Build Better After-Tax Income. Industrial Dividend Fund invests primarily in dividend-paying Canadian securities to generate tax-advantaged income with the help of the In addition it offers potential for capital growth (with preferential tax rates here, too.) For more information on how you can build better after-tax performance for you invest- ROBERT GOW i (905) 434-7156 : 111 Simcoe St. N. RICHARDSON . GREENSHIELDS Oshawa, Ontario L1H 7M9 [7] Important information about this mutual fund is contained in the simplified prospectus. Investors should obtain a copy from their investment advisor and read it carefully before investing. When purchasing mutual funds, investors should be awarc that: » mutual fund investments are not guaranteed; ¢ unit values and investment returns will fluctuate over time. kenzie Building Financial Independence she will receive 50 per cent of the unpaid balance either as a lump sum RRSP transfer or as cash, with the appropriate tax deducted at source. After the shock has settled down a bit, Colleen and Michael have a lot of things to consider. 1) How easy will it be for Col- leen to get another job? 2) Does she want another job as an employee or is it time to consider self-employment? 3) How can the couple elimi- nate the credit card balance and car loan - or should they? Some- times it is not wise to pay off debts right away. The debt will be paid off eventually, and they may necd that extra cash for an emergency. 4) Have Michael and Colleen done a cash flow and budget for the family? This should be done using various scenarios - the next nine months on salary, then up to a year on UIC; start- ing self-employment with the buy-out taken as salary to start, and then going into an RRSP. If job prospects look grim, now is the time for the couple to cut back on frills and try to pay off the credit cards on a monthly basis. 5) If Colleen puts the sever- ance money into an RRSP, what «ind of RRSP should it be? Should it be invested long term or kept more liquid to allow them to take money out if need be? Can they sleep at night if it is invested in the stock market or should it be in guaranteed in- vestments? Even if Colleen gets ajobright away it might be wise to have some of the golden handshake readily available - just in case things do not work out. 6) What are the tax implica- tions of one option vs the other? What are the AMT (alternative minimum tax) implications of the buy-out? If either Colleen or Michael is a U.S. citizen there could be serious tax implica- tions to a buy-out on their U.S. return. Plan forthe future Pension If you receive income from a Company Pension and wish to take advantage of the tax sav- ings and income splitting bene- fits of contributing to a Spousal RRSP, you have until Feb. 28, 1995 to do so. After that date this option will no longer exist. There is an additional advan- tage in this type of RRSP contri- bution this year, not only does it: DJ TAYLOR INSURANCE BROKERS LTD. 169 North St., Port Perry L9L1B7 Guaranteed Investment Certificates (Rates Subject to Change without Notice) PHONE 985-8416 G.I.C. FIVE YEAR 8% TEE Rei Sl EE Learn to Prepare Income Taxes HzR BLOCK INCOME TAX TRAINING SCHOOL m Learn a NEW skill! m Increase your tax KNOWLEDGE! m CONVENIENT times & locations! Very simply, we don't know That's a question you have to answer. But we can certainly help. Look at the Trimark Balanced Funds for mstance. For the conservative investor, they provide a level of com: fort usually associated with investments with a much lower rate of return Fach one 1s a balanced portfolio of well-established companies All returns audited Iv Fraser & Young hartered Avy ountants ine pavable by unitholder< which would have reduced vets Pag performane, prospectus Read vour prospectus careful Belone inves 3 YEARS 5 YEARS 10 YEARS n/a VYEARS YEARS 10 YEARS Fund performance to August 31. 1994 Irimark Balanced Funds TrRIMARK INCOME GROWTH Funo A\ TRIMARK SELECT BALANCED FUND mecan obtamm one from the deaicr above does not guarantee tute vesudis Your unit value and imvesiment return wall fl WHAT'S THE RIGHT BALANCE BETWEEN RISK AND RETURN? ETT ETI NTH 9.0% 14.0» 9.8% n/a I YEAR ET TY ITA EYRE TN TRY 0.6" 13.5% n/a I YEAR and convertible and fixed- come securities. And as you can sce from the figures to the left. cach one 1s a proven per- former. So if you're looking to minimize risk, we can help. If you're looking to maximize return, we can help there too In this case, 11's all brought together ATRIMARK mn one fund WE MANAGE. TO OUTPFRFORM. hastortcal annual compounded total rates of ret and reflect hanges mum value and distributions revested They do twctuate Important imformanon about any mutual fund contained in is simplified For more information call: J | GREENSHIELDS pte { ] Robert Gow (905) 434-7156 [11 Simcoe St. North Oshawa. Ontario 11H 7M9 not take mito ae ound sale hang SAL admin ann, fren Michael and Colleen's situa- tion isn't unique, and you may be forced to tackle some of these issues yourself. Even if you're not faced with a job loss scenar- 10, there are always estate plan- ning and investment considera- tions to explore. The most important thing is not to get caught without a plan. Regardless of your specific circumstances, it's wise to dis- cuss your financial planning re- quirements with an impartial person. Your BDO financial ad- visor has the personal financial planning and tax resources to help you solve even the most complex problems. Courtesy of, Randy. Hickey, CA, Partner BDO Dunwoody Ward Mallette, Uxbridge Income A) Save you paying tax on up to $6,000 of eligible pension in- come. B) Split your future income between yourselfand alowerin- come spouse and thus put you into a lower tax bracket. C) Possibly create or increase an Ontario Tax Credit and/or GST Refund. But as of this, the first year the Non Refundable Age Credit for those over 65 will be geared toincome,itcould: D) Increase your age credit by reducing Net Income thereby reducing the amount that net income exceeds $25,921 (the magical number that determine if you are eligible for the full age credit or not). For those of you who did not realize this option existed, let me give you a few ground rules. Up to $6,000 of pension income from a Company Pension or from Foreign Pensions can be contributed to a spousal RRSP provided your spouse is under 71 years of age. This does not re- duce the amount that you may be eligible to contribute to your own (or your spouse) RRSP that is based on 18 per cent of the previous years 'earned' income from employment, rental and CPP Disability Pension. But remember, this is the last year this type of contribution can be made. Whilst investing in RRSPs is a sound idea especially for those with many years ahead of them until retirement, one should al- ways take into consideration ones present and future income and that of ones spouse, so that the effect of any contributions are maximized. i.e. Should both spouses contribute, or should the family contribution be made by only one? Should one contrib- ute to ones own RRSP or a spou- sal, or split between each of you? Are you permanently re- ducing the tax burden on your contribution or just deferring it? Should you be considering a high risk investment such as Working Ventures in order to recoup the immediate tax ad- vantages? There are many oth- er situations to take into ac- count to insure that you get the best return out of your contribu- tion, everyone's situation is unique. So be sure to investi. gate all the possibilities. If you have any questions on this or any other tax related sit- uation, please feel free to con- tact our office. Courtesy of, Kathleen White, H&R Block, Port Perry ~~ -- --------------. hu si -- IE. , EL