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There Ought to be a Word for That


									continued from page 3                                • 100% RRSP eligible funds.                           If you would like more information on
4. Foreign Content Penalties are                         Investors today are snapping-up
  assessed at the end of the month.                      RRSP eligible funds that invests                  any of these funds or to book an
  If your account goes “offside” on                      completely outside of Canada. The
  the 28th of the month, you will be                     obvious question is how can this                  appointment to discuss their suitability
  liable for a 1% per month penalty                      work? Without getting into too
  on the amount that is offside.                         much detail, these popular funds                  in your investment portfolio, please
  Many companies will automatically                      utilize derivatives. Derivatives are
  re-adjust the foreign content                          investments that “derive” their value             give us a call at 436-7777 or email us
  prior to the end of the month.                         from and underlying stock, bond or
                                                                                                           at We look forward
  For Self-Directed plans it is your                     market (global investments). The use
  responsibility.                                        of derivatives in Canadian Mutual                 to hearing from you.
                                                         funds is strictly regulated.
Going Beyond 20% Foreign
Content in your RRSP / RRIF                          Following is a list of some of the most
As mentioned, according to Revenue                   popular RRSP eligible global mutual funds:
Canada the maximum that any                                                                             RRSP    1Yr Ret 2Yr Ret 3Yr Ret 5Yr Ret 10 Yr Ret
investor can invest outside of Canada is               Global Balanced
20%. There are, however, some impor-                   C.I. International Balanced RSP                  Yes      5.1%      13.6%     12.6%
tant ways to increase foreign exposure                 Guardian International Balanced Classic          Yes      5.3%       8.7%      8.9% 7.6%
beyond 20%.                                            Universal World Balanced RRSP                    Yes      3.7%      10.8%     12.8% 10.6%
                                                       Global Equity
• Canadian investments that utilize                    AGF RSP International Equity Allocation          Yes      4.4%      15.3%     12.2% 11.6%
  their own 20% maximum. For                           C.I. Global Equity RSP                           Yes      6.6%      15.6%     14.1% 9.9%
  example, the Universal Canadian                      Global Strategy Divf World Equity                Yes     13.0%      20.0%     15.9%
  Growth Fund is a Canadian Equity                     Talvest Global R.R.S.P                           Yes      9.6%      21.1%     17.8% 11.6%
  Fund that has 20% invested outside                   Universal World Growth RRSP                      Yes     -0.5%       7.2%     10.6%
  of Canada. If you buy this fund and                  Global Bond
  also maximize your own 20% in a                      AGF Rsp Global Bond                              Yes     11.1%      10.2%      8.2%    6.1%
  foreign fund, you can increase your                  Atlas World Bond                                 Yes      3.2%       5.4%      5.7%    6.6%
  foreign content to as high as 36%.                   C.I. Global Bond RSP                             Yes      6.7%       7.7%      7.2%    7.4%
                                                       Dynamic Global Bond                              Yes      1.4%      -1.8%      0.7%    3.5%       7.2%
                                                       Global Strategy Divf World Bond                  Yes      8.5%       8.3%      7.3%    5.9%
   80% Canadian Equity     20%         20%             Guardian Foreign Income Class A                  Yes      9%         9.2%      8.3%    7.3%       8.6%
                          Global      Global           Spectrum United RSP International Bond           Yes     10.9%       6.4%      4.2%    5.5%
                          Equity      Equity           Talvest Foreign Pay Canadian Bond                Yes     12.7%      11.7%      9.9%    7.6%
                                                       Universal World Income RRSP                      Yes      5.0%       8.8%      9.0%    6.6%
                                   36%                 American Equity
                                                       C.I. American RSP                                Yes     12.8%      25.9%     21.0%
                                                                                                           SOURCE: Bell Charts as of March 31, 1999
 JUST                           e
                          Depr ondown                                     nd: The fe
                                                                                      w seconds

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                                                   m on
                        game ng all the ting from WNS). of
                                                             Nutraseco fore the aftertaste
                                                                pleasure b
                                                              of a
                                                                   diet drink
                                                                              sets in.
                                                                                                   JOKE of the MONTH!
                                                                                                    What Did You Say?
                                                                                                    Seems an elderly gentleman had serious hearing
                            livin while co rs to a
                                 g roo          nfine                                                problems for a number of years. He went to the
                                        m.            d in Lexplexed: Unable to find the
                                                           correct spelling of a word in            doctor and the doctor was able to have him fitted
                                                           the dictionary because one               for a set of hearing aids that allowed the gentle-

              Ought to be
                                                           does not know how to spell it.           man to hear 100%.

                                                   Coino  phony: Ann
                                                   et concerts           oying pock                 The elderly gentleman went back in a month to
            ord for Tha
                                                                conducted                           the doctor and the doctor said “Your hearing is
                                                   ple who lik              by peo-
                                                               e to jingle                          perfect. Your family must be really pleased that
                                                  and keys, o              change
                                                              ften accom                            you can hear again.”
                                                  by a rockin              panied
                                                              g motion.
                                                                                                    To which the gentleman said “Oh, I haven’t told
                                                               Todlitter: Food debris residing
                                                                                                    my family yet. I just sit around and listen to the
                                                               under a high chair following an
                                                               attempted feeding.
                                                                                                    conversations. I’ve changed my will three times!”

 Important information about mutual funds are found in the simplified prospectus. Obtain one from your Manulife Securities Account Representative and
 read carefully before investing. Any rates of return published in this newsletter are historical in nature and in no way indicate future performance.
 Unit values and investment returns can fluctuate.

  Newsletter of Kofin Financial Group                                                           Volume 9 Number 2

                                Tips 4
                                                         4 Consider income
                                                         splitting opportunities.      Maximizing
                                                         Income splitting is key
                                                         to creating more tax
                                                                                         Your Retirement Income
                               TO MAXIMIZE               efficiency in retire-           Since the beginning of the year, we
                        Your Income                      ment. Consider strate-
                                                         gies like Spousal
                                                                                       have been offering our well-known
                                                                                       educational seminars for clients, refer-
                                            RRSPs, redistribution of investment        rals and the public. In addition to our
                                            income and CPP splitting.                  usual Money Whys Seminar, we

                   1 5
                     1 Take CPP early.                                                 offered the Maximizing Your Income
                                           5Draw RRSP / RRIF income in a               Seminar in conjunction with Temple-
                      If you have           low tax environment. Sometimes             ton Mutual Funds. The response was
                         reached your       deferring RRSPs is not always the best     overwhelming and due to the demand,
                         60th birthday,     solution. If you are in a low tax brack-   we were happy to offer a second ses-
                       you qualify to       et today and you know future income        sion in March.
                      apply for early       sources (OAS, CPP, and pensions) will
                     CPP. Taking the                                                     This edition is dedicated to provid-
                                            push you into the higher bracket, it
 benefit early means a reduction of                                                     ing some strategies to enhance
                                            might be more beneficial to take
 income by 0.5% per month prior to                                                     income and investment returns. If you
                                            money out of your RRSP today.              would like a review of your retirement
 your 65th birthday. For example if

                                           6Consolidate RRSPs into a mutual            income, please do not hesitate to give
 you take income at age 60, you will
                                            fund RRIF. With the low interest rate      us a call.
 lose 30% of the benefit you would
 receive at age 65 (0.5% x 60 months        environment, consider mutual funds
                                            for your RRIF. Even a conservative         Education is our Approach
 = 30%). Despite this reduction, you                                                      From the day we were born, we
 will be receiving income 5 years ear-      portfolio will have an excellent
                                            chance of out-performing GICs.             began the learning process – watching,
 lier. According to our calculations, it                                               listening, walking and talking. Learn-

 takes 17 years before you “catch up”      7Maximize tax efficient income from         ing continued in school where our
 by deferring income to age 65.             non-RRSPs. Dividends and capital           knowledge expanded to topics like
                                            gains provide tax advantages to

2CPP splitting. If the higher income                                                   math, reading, history, computers, etc.
 spouse is earning a higher CPP             investors over interest income.            The learning process did not end after
                                            Switching to investments that pro-         school. We continued to take courses,
 income, then consider splitting CPP
                                            duce these tax benefits will help to        read books, watch programs and attend
 with your spouse. You must both
                                            create greater tax efficiency.             educational seminars.
 have reached age 60 and have
                                                                                          We commend you for seeking

 both applied for CPP.                     8Allocate interest income to lower
                                                                                       knowledge in the financial services
                                            income spouse. Since interest income

3Watch your income tax brackets.                                                       industry and we believe you have
 Since we live in a marginal tax rate       is 100% taxable, it is better to have
                                                                                       come to the right place. Our business
 system, the more money we make,            the lower income earner                    is centered on providing relevant, top-
                                                               continued on page 2
 the more tax we pay. Jumping into                                                     ical information so you, our client,
 higher tax brackets could be costly                                                   can make better financial decisions.
 especially when moving from the            In this issue                                 We hope you enjoy our seminars,
 26% bracket to the 40% bracket.            10 Tips to maximize                        newsletters, website and updates on
 Be aware of your total income level.       your income . . . . . . . . . .page 1      the industry. If you have any ques-
                                            What are my RRSP                           tions, comments, or ideas, contact us
                                            Maturity Options . . . . . . .page 2       by phone, fax, or email. We enjoy to
                                            Foreign Content                            hear from our clients and look for-
                                            & more! . . . . . . . . . . . . .page 3    ward to your call.
continued from page 1
 take interest. Before you make any
 changes in your taxes, be sure to talk
                                              What are my RRSP Maturity Options
 to an accountant or tax professional.             You have four RRSP                     RRSP Maturity Options: Key Features
                                                   maturity choices:

9Consider income mutual funds for                                                                                 RRIF     LIFE ANNUITY   FIXED-TERM ANNUITY
                                                1. Cash out the plan. The
 non-RRSPs. Income mutual funds                    full value will be added to            Lifetime income         Optional Yes            No
 are an excellent tool to create income            your income for the year               Offers variable    Yes           No             No
 from non-RRSP investments. They                   and taxed accordingly.                 income/withdrawals
 provide excellent yields and have                 This is normally not a
                                                   good idea unless you                   Inflation protection     Yes      Reduces        Reduces
 extremely tax efficient distributions.                                                                                    initial income initial income
                                                   have a very small plan.

10 Draw income from life insurance.                                                       Can grow capital        Yes      No             No
                                                2. Use your RRSP money
 For those of you with significant cash              to buy an annuity.                    Investment choice       Yes      No             No
 values in your life insurance, consider                                                  Control over plan       Yes      No             No
                                                3. Convert your RRSP to
 drawing income “tax-free”. There are               a Registered Retirement               Spousal Protection      Yes      Available      Yes
 arrangements that can be made with                 Income Fund (RRIF).                   Estate value          Yes       No*           Yes
 banks to get money out of the policy                                                     *If planholder accepts less income, annuity issuer will
                                                4. Any combination of
 without surrendering the policy. Life              the above.                            guarantee a set number of payments.
 insurance is a great opportunity to
 create income.
The best advice we can give to anyone
                                              Why RRIFs make Sense today?
trying to maximize income in retirement        A RRIF gives you full control and flexibility over your savings. In a dynamic world,
is to plan ahead. Proper income and            these two qualities are the most important to retiree’s. Consider why RRIFs give our
tax planning requires a thorough eval-         clients more control and flexibility:
uation of your total financial situation.                                                          RRIF
We take time out of our lives to plan          Income Flexibility                                        Investment Selection
everyday events such as vacations, big         • Provides maximum income flexibility.                     • You decide how to invest your RRIF.
purchases, and even the upcoming               • You can tailor an income stream to suit                 • You may invest in the same wide range of
weekend but we often neglect plan-               your requirements and make adjust-                        investments as an RRSP.
ning our financial future. Our clients            ments at any time, including lump sum                   Estate Planing
have access to one of the best retire-           withdrawals for emergencies or special
                                                                                                         • A RRIF may be transferred to your spouse
ment planning programs in Canada                 purchases.
                                                                                                           tax-free upon death without any delay or
without cost. Consider our Portfolio           • You may annuitize your RRIF, in whole                     loss of income flexibility or control
Analyst service to ensure your finances           or in part at any time.
                                                                                                         • If you do not have a spouse, any remain-
are structured efficiently.                                                                                ing RRIF assets may be paid to your
                                                                                                           estate or designated beneficiaries.

      S    E   N    I   O    R     S
                                                                                                             Are you turning
   Take this opportunity to have our                                                                         69 this year?
   experienced financial counsellors                                                                            If you were born in 1930, you are
                                                                                                             required by the income tax regulations
   give you unbiased, informed and
                                                                                                             to mature your RRSPs on or before
   independent information that can
                                                                                                             December 31, 1999. Don’t wait until
   maximize your retirement income                                                                           the last minute. The decisions you make
                                     Tom Kofin                Grant F. Strand James Yih
   and provide the following         B.Comm., CLU,           Dip. A.A. (Hons),   B.Comm
                                                                                                             could have a major impact on your
                                     CH.F.C., CFP            CLU, CH.F.C., CFP
   “MONEY-WHYS”:                                                                                             retirement income and income tax bill
                              • you should explore your RRSP maturity options                                for many years to come. It is better to
                              • RRIFs and annuities may or may not be best for you                           start well before the maturity date to get
                              • qualified professional advice is essential                                    a jump on proper planning. Please give
                              • investment funds are popular today
                              • retirement/severance packages need careful planning                          us a call if you are turning 69 this year.
                              • seniors can achieve 8% + returns
                              • planning for minimum tax liabilities or death is vital

                                                                                                            Newsletter of Kofin Financial Group
 Suite 890, 4445 Calgary Trail S. Edmonton, AB, T6H 5R7 Ph: 436-RRSP                                        Publisher: James Yih

                                                                Volume 9 Number 2                                                          MoneyWise
Wi se                 From the Account Representatives of
                      Manulife Securities International Ltd.
                                                                                                  Volume 9 Number 2

                                                                                       2. Self Directed RRSPs are considered
                       Everything you wanted to know about
A                                                                                         one plan. One advantage of the
                                                                                          Self –Directed RRSP is the ability
          ocus             Foreign Content
                                                                                          to manage foreign content more
   on Mutual Fund                                                                         efficiently. No longer do you have to
                                                                                          worry about maximizing the foreign
     Fund Wise is                                                                         content within different plans. You
        written by
       Tom Kofin,      MORE!                                   he media, the industry
                                                              and investment pro-
                                                                                          can also “cherry-pick” your favorite
                                                                                          global fund. For example, let’s say
Grant Strand and                                         fessionals have discussed        you really like the Templeton
  James Yih who
                                                           the merits of global           Growth Fund. However, if you went
                                                             investing in depth. The      to Templeton with your RRSP dol-
      are account
                                                              merits include higher       lars, only 20% could go into the
                                                              potential returns,          Templeton Growth Fund and 80%
       of Manulife                                           diversification, less         would have to go into their Canadi-
        Securities                                          risk, and increased           an Funds. In a Self directed RRSP,
 International Ltd.                                       investment opportunities        you can use your favorite Canadian
(MSIL). MSIL is a                                      which are all good reasons         fund and your favorite global fund.
      mutual fund                          why every investor should consider
                                                                                       3. Foreign content is calculated on book
  dealership. The       global diversification outside and inside your RRSP.
                                                                                          value. Book value is the actual
       contents of      The one issue investors must deal with is the 20%                 amount that you paid for the invest-
    FundWise are        maximum foreign content limit. This rule simply limits            ment plus any distribution issued by
         meant to       the foreign content to 20% of your book value. It is              the mutual fund. If the foreign con-
 provide relevant
                        important to note some very important details to                  tent grows faster than the Canadian
                        managing the foreign content:                                     part, you will have a plan that has
   information on
                                                                                          more than 20% foreign content.
    Mutual Funds        1. Foreign content is monitored on a per plan basis.
                                                                                          However, if you do not buy or sell
  and the Mutual           The best way to explain this is by example. If you have
                                                                                          (no transactions) then you will be
                           $50,000 in RRSPs at the Royal Bank, you cannot go to
Fund industry. We                                                                         fine because only the book value is
                           Templeton Mutual Funds and invest $10,000 (20%) in
  hope you enjoy                                                                          used to calculate the foreign content.
                           their Global Equity Fund. Both Templeton and the
  the information.                                                                                          continued on page 4
                           Royal Bank must report the foreign content to
                           Revenue Canada individually.
                                                                                              Helps p r e a d
                                                                                                          THE WORD!
SPECIAL THANKS!                                                                                    Many of you have already
                                                                                                        introduced us to your
      Kofin Financial Group continues to deal with                                                          friends, family and
    many different banks, trust companies, life insur-                                           colleagues and for us, that is
                                                                                                      the highest compliment.
    ance companies and investment fund companies
    to help our clients attain their financial and                                                   We are always looking for
    retirement goals.                                                                              more great clients like you.
                                                                                                  We treat your referrals with
                                                                                                       the highest respect and
     We are very fortunate to have some of these                                                    ensure they will be happy
    companies sponsor the Fund Wise Newsletter. A                                                 loyal clients like yourselves.
    very special thank you goes out to our sponsors:                                                        We appreciate your
                                                                                                            continued support.


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