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Financial Edition

2011


Saving for your future made easy Although retirement may seem like its decades away, starting to save while you are young can help set the stage for a comfortable retirement. “You don’t have to give up what you enjoy now to save money for the future,” said Lee Anne Davies, head, Retirement Strategies, RBC. “It can be easy by starting off with a small amount every month.” Consider the following scenario: Sarah and James are twins. Sarah is 25, busy and has a decent job, and decides to begin contributing to an RRSP. To make things easy, she contributes about $150 a month through

an automatic plan. By the end of the year, her contributions total $1,800. Over the next 10 years she will build up a nest egg of approximately $25,000, assuming an annual rate of return of 6 per cent. At the age of 35, Sarah decides to focus on paying down her mortgage, as well as investing in a Tax Free Savings Account. She feels secure knowing that even if she doesn’t contribute to her RRSP again, it should grow to almost $153,000 by the time she turns 65.* James takes a different approach than Sarah. Like his sister, he too has a steady job. He decides to start in-

vesting at the age of 37 and begins to make the $1,800 annual contribution. In order to keep up with Sarah, he will have to keep those contributions up for 29 years, as opposed to Sarah’s 10 years, to ensure he has a nest egg of just under $140,500 by the time he’s 65.* “Our advice is to start saving as early as possible,” said Davies. “A good way to save is to set up an automatic savings plan and create that savings habit. This way, you don’t see the money and you hardly miss it, but it’s already working for you.” Copyright/Reproduction Notice: This article is content from Royal

Bank of Canada’s (Royal Bank) Editorial Edge website and is subject to the website’s terms of use. Royal Bank holds the copyright for the content of Editorial Edge, but agrees to grant the users of the Editorial Edge articles a royalty free, non assignable, licence to use, reproduce and communicate the articles featured herein, provided that the user is a journalist, it is used or reproduced accurately and not taken out of context. Any unauthorized use of the content constitutes a violation of Royal Bank rights. Royal Bank reserves the right at any time to revoke the said licence and require that a user immediately cease to use the said content upon notification.

TIME FOR A SECOND OPINION? How did your investments perform last year? If you do not know or your expectations are not being met, it’s possibly time to consider our free no obligation second opinion service.

Life Insurance & Investment Products

Kristin Mottram, PFP

Wayne Bodenstab

Richard Thompson

Terri Lemke

BA, FMA, CIM, FCSI

FMA, CIM, FCSI

PFP, CIM, FCSI

Investment Advisor 306.657.4602

VP, Investment Advisor and Branch Manager 306.657.3472

Senior VP and Senior Investment Advisor 306.657.3465

201 Main Street, PO Box 248, Kelvington, SK S0A 1W0 Ph 327-4880 Fax 327-4657 Email kmottram@credential.com

Toll Free: 1-877-657-3465 LEMKE | THOMPSON | BODENSTAB WEALTH MANAGEMENT GROUP

Wellington West Capital Inc., Member-Canadian Investor Protection Fund

C6005

Credential Financial Strategies Inc. is a member company under Credential Financial Inc., offering financial planning, Life Insurance and Investments to members of credit unions and their communities. Credential is a registered mark owned by Credential Financial Inc. and is used under license. Monday, January 31st - 7:00 PM at the Bella Vista With special guests Darian Durant and President and CEO of Golden Opportunities Fund Grant Kook Wednesday, February 16th - 12:00 PM Luncheon at the Bella Vista Monday, February 7th - 7:00 PM seminar in the Manitoba Room at the Ramada in Saskatoon Details on how to RSVP below

79%

RECEIVE UP TO

IN TAX SAVINGS*

ON YOUR INVESTMENT

We know how hard it is to save these days, but with a plan and a program you can be a savings success story. We can help you get there. LeRoy Credit Union Limited offers many different investment options – RRSP’s, RESP’s and Tax Free Savings Accounts. How do you know which one is right for you? An RRSP lets you save money for retirement and save on taxes too. You can also start saving tax free for your child’s education with an RESP. We can help design a savings plan that will meet your goals. Catch the home town spirit. Phone 286-3311 Fax 286-3377 Website www.leroycu.ca 2 ECT FRIDAY, JANUARY 28, 2011

DISCOVERING TREASURES Investing in innovative Saskatchewan companies with underlying value and growth potential.

+ + + + + Rating by globefund.com (Class A-share as of November 30, 2010) Funds are ranked from one to five stars, with the top-ranked funds getting five stars.

Join over 22,000 shareholders. Ask about easy investment options in Golden Opportunities Fund Class A-shares and Class i-shares. SOLD BY PROSPECTUS ONLY – FOR FURTHER INFORMATION CONTACT:

Michael Barlage B.COMM Jonathon Barlage B.COMM ACCOUNT REPRESENTATIVES You are invited to attend an evening featuring Golden Opportunities and the Saskatchewan Roughriders Quarterback Darian Durant! January 31, 2011 7pm at the Bella Vista in Humboldt RSVP by: TEL: (306) 682-1601 EMAIL: jonathon.barlage@manulifesecurities.ca WIEGERS FINANCIAL

44%

RRSP Tax Savings $2,200

20% Provincial Tax Credit $1,000

15%

21%

Federal Tax Credit $750

Your Cost $1,050*

INVEST $5,000 FOR A NET AFTER TAX CASH OUTLAY OF ONLY 1,050!* 20% Provincial Tax Credit + 15% Federal Tax Credit + 44% RRSP Tax Savings

$ $ $

= 79% in Total Tax Savings

$ 3,950

Your Net After Tax Cash Outlay $

1,000 750 2,200 1,050*

*Example above assumes a marginal tax bracket of 44%, a minimum taxable income of $127,022, and a maximum $5,000 RRSP investment.

“I am proud to be a part of Saskatchewan and associated with Golden Opportunities because of the positive community work the Fund does in the province.” Darian Durant, Quarterback for the Saskatchewan Roughriders

Darian Durant is not a registrant and his representation in the brochure is intended for community spokesperson purposes, not an act in furtherance of a trade. Commissions, trailing commissions, management fees and expenses all may be associated with an investment in Golden Opportunities Fund (GOF) shares. GOF is a Retail Venture Capital Fund (RVC). RVC shares are speculative in nature and may not be suitable for all investors. RVCs are not guaranteed, their values change frequently and past performance may not be repeated. Tax credits are available to eligible investors provided that the shares are held for at least eight years from the date of purchase. Redemption restrictions may apply. RVCs are outlined in the Prospectus, which you should read before investing. To obtain a free copy of the Prospectus, please contact Wellington West Capital Inc., a member of Canadian Investor Protection Fund (CIPF), the Fund’s Principal Distributor, at www.wellingtonwest.com, or your Financial Advisor.


Share the Wealth – Use a Family Trust A family trust is created for the benefit of an individual’s immediate family and relatives. Typically, a grandparent settles the trust, the beneficiaries are the parents and their children, and the trustees include the parents. Family trusts are usually discretionary trusts, meaning the trustees have discretion over the distribution of income and capital among the beneficiaries. What are the advantages of using a family trust? Family trusts are popular vehicles for sharing wealth with family members because they offer the trustees the flexibility to accommodate the changing and competing needs of the beneficiaries. The separation of legal and beneficial ownership of properties held in the trust allows the parents to retain legal control of the properties set aside for the benefit of their children. That separation also provides some protection from claims by creditors and undesirable dependents, such as those arising from a matrimonial breakdown. A family trust is often used for splitting income among family members. However, when income is distributed to family members who are taxed at a lower marginal tax rate, two aspects of the Income Tax Act must be taken into consideration: the “attribution rules” and the “kiddie tax.” In general, the attribution rules can attribute income to the settler or to related persons who lend or transfer property to the trust if one of the main purposes may reasonably be considered to reduce their income and to benefit other individuals. The kiddie tax essentially will tax certain types of income received by a minor child. (i.e., not 18 years of age in the year), at the top marginal tax rates, and therefore eliminate any tax savings. An important benefit of the family trust is its

ability to allocate future capital gains realized on the sale of qualified small business corporation (QSBC) shares. This may result in substantial tax

savings by allowing more than one person to take advantage of the enhanced capital gains exemption (currently $750,000) available to all individu-

www.pwc.com/ca

Protecting the investment

Shane Biehn, CFP 600-350 3rd Avenue North Saskatoon, SK S7K 6G7 Toll Free, 877-934-2466 Mobile, 306-222-8951 Email, shane.biehn@manulifesecurities.ca

WE WANT TO HELP YOUR FAMILY HAVE A BETTER FINANCIAL FUTURE! We will show you how to deal with serious issues affecting Canadians today: • What happens if the Canada Pension Plan isn’t enough? Learn how to supplement your current retirement plan. Worried about a post-secondary education for • your children or grandchildren? Learn how to prepare for their future and not start their adult lives in debt. Worried about the security of your family’s • income in the event of your death? Get the life insurance coverage that meets your needs. Do you know when you will be debt free? •

At PwC, we help clients create lasting value— addressing their most pressing business concerns and managing operational issues without losing sight of their long-term goals. 106 Saskatchewan 1713 - 8th AvenueAvenue East Outlook, SKSK S0LS0K 2N0 2A0 Humboldt, 306 306 867 6829944 5242

123 2nd Avenue South, #200 Saskatoon, SK S7K 7E6 306 668 5900

© 2011 PricewaterhouseCoopers LLP. All rights reserved. “PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. 0907-01 0111

RRSP prepared

imagine feeling this way about your investments

als. On the sale of the QSBC shares, the family trust can distribute the taxable portion (i.e., 50%) of the capital gain to the beneficiaries. To the extent that a beneficiary has unused lifetime capital gains exemptions, he or she will be able to shelter the income received from the trust. The non-taxable portion of the capital gains can then either be retained in the trust or distributed tax-free to other capital beneficiaries. For this good reason family trusts are also used for estate planning. The discussion below illustrates the use of a family trust for an estate freeze in the context of a family business. How is an estate freeze implemented with a family trust? An estate freeze generally refers to a transfer of wealth from one generation to another. Typically, a parent owns the common shares of his or her operating company. Over time, these shares have appreciated in value. The parent exchanges those common shares for fixed-value voting preferred shares on a tax-deferred basis. The redemption value of the preferred shares is fixed (and therefore “frozen) at the exchange, the parent may be able to trigger a capital gain to the extent of his or her unused capital gains exemption (discussed above) if the shares are QSBC shares at the time of the freeze, without creating a tax liability. As a consequence, future changes to the tax rules will not hurt the parents. After the freeze, the family trust subscribes for a new class of common shares (i.e., the growth shares) for a nominal amount. This allows the future growth of the business to pass on to the children, while the parent retains control over the operation of the business and the distribution of profits to the children, as trustee of the family trust and through the ownership of voting preferred shares.

For all your RRSP Needs Stop in at Accent Credit Union today and speak with our qualified Investment or Loan Specialists

Kelvington 327-4728 Quill Lake 383-4155 Jansen-Esk 364-2057 Hendon

338-3211

Personal and Corporate Tax Farm Tax and Programs Bookkeeping Services Payroll

HERGOTT, SEIDEL & ASSOCIATES LTD. PUBLIC ACCOUNTANTS

For answers to your financial questions, call: Representative David Rascher Phone: 306-763-7378 Fax: 306-763-7379 GoSolo 866-895-9728 106 - 1322 Cental Avenue Prince Albert, Sk. S6V 4W3

You can.

Life insurance offered by Primerica Life Insurance Company of Canada Mutual Funds offered through PFSL Investments Canada Ltd., Mutual Fund Dealer **Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Mutual funds are sold by prospectus only. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Make your RRSPs work harder Talk to one of our experts to find out how.

Invest in Mutual Funds and more

“providing a friendly, comfortable and accessible environment for our clients”

P.O. Box 1510 512 - 7th Street Humboldt, SK S0K 2A0 Phone: (306) 682-5058 Fax: (306) 682-2954 Email: admin@hergottseidel.com 3 ECT FRIDAY, JANUARY 28, 2011


11015TS00

Everywhere LifeTakes You...

advantagecu.com

Retirement savings behind schedule? Don’t give up - catch up! Registered Disability Savings Plans

reachus@ advantage.cu.sk.ca

RBC INVESTMENTS

For the boomer generation, the concept of saving for a comfortable retirement has always been an important goal. Many boomers are in their peak earning years; some are at or near retirement; and with volumes of nancial and investment information available, awareness of the need to save is greater than that of any previous generation.

The truth; however, is that it’s not too late. By implementing some catch-up strategies, it may still be possible to reach your retirement goals. To catch up on retirement savings, consider doing the following:

• Make Regular Contributions to your RRSP: Sometimes, people who are behind in their saving are reluctant to even explore strategies that could help them get back on track. Why? Because they think they can’t afford it. One approach is to start slowly, setting aside small amounts. Consider an automatic RSP contribution program to make these small steps a priority in your nancial life.

• Carry forward unused contribution room: Investors who don’t regularly maximize their annual RRSP contributions miss out on signicant tax-deferred growth potential. The good news is that you can carry forward any unused contributions to future years.

• Reduce your debt: Making regular payments to reducing debt can make it difcult to nd money for an RRSP contribution. Generally, the best strategy is to start reducing high-interest debt such as credit card debt, then focus on lowerinterest debt such as a mortgage. • Take out an RRSP loan: In certain situations, it makes sense to take out a loan to top up your RRSP. For example, if you have unused RRSP contribution room, you can borrow money to catch-up, and then use the tax savings to help repay the loan. • It may be you or someone you know who may qualify for the Registered Disability Savings Plan. Some huge grants/bonds are available from the government. Call me and I will explain.

While it’s important to create a plan to help you meet your nancial goals in retirement, it’s also important to focus on how you want your life to look in retirement. Take a step back from your nancial worries and look at where your retirement future is going. It’s possible that anxiety about retirement savings can be put into perspective once your life plan is considered.

ST. GREGOR Credit Union Limited MEMBER EQUITY PROGRAM Thanks to the support of our Membership we are pleased to announce the Patronage Allocation for 2010 in the amount of

$175,000.00

St. Gregor Credit Union Limited has allocated for eleven consecutive years

Totaling $1,525,000.00 We thank you for your patronage!

The Annual Meeting regarding St. Gregor Credit Unions 2010 Financial Statement will be held Tuesday March 15, 2011 at St. Gregor Community Hall. Come and celebrate our 68th year of operations! Registration 6:00 p.m. Banquet 6:30 p.m. Meeting to Follow.

For more information about RRSPs, or to speak with a nancial planning professional, please visit any RBC Royal Bank® branch.

Dan Tratch, RBC Investments Financial Planner

Humboldt 682-8316 • Lanigan 365-5000 • Wadena 338-5550 4 ECt Friday, January 28, 2011

St. Gregor Credit Union Limited Main Branch

St. Gregor Credit Union Limited Annaheim Branch


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