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 info@koﬁn.ab.ca. 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%
• 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
Depr ondown nd: The fe
game ng all the ting from WNS). of
Nutraseco fore the aftertaste
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
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
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
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 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
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
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
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-
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-
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
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
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