Transcript: Finance | Sep 29, 2000

(music plays)
In animation, the title appears inside the shape of a house: “More to money.”

The opening sequence shows a wooden table with a small lit candle as several words fly by: Investments, careers, finances, pensions, money.
Fast clips show different sets of hands performing activities on the table such as pulling petals from a daisy, drawing a big red heart, tuning a violin, flipping through the pages of a book, cooking, and pouring a glass of red wine.
The title appears again.

Then, Maureen Taylor appears in a studio with yellow walls which read “More to life.”

Maureen is in her late thirties, with wavy blond hair in a bob. She's wearing a beige blazer over a pink silk blouse.

She says GOOD YONTIFF,
BEST WISHES FOR THE JEWISH
NEW YEAR AND WELCOME TO
“MORE TO LIFE.”
WHAT'S KEEPING CANADIANS UP
AT NIGHT?
ONE STUDY SAYS WE'RE LOSING
SLEEP WORRYING ABOUT OUR
ECONOMIC SECURITY.
WE'RE NOT CERTAIN WE'D FIND
ANOTHER JOB QUICKLY IF WE
SUDDENLY LOST OURS, AND WE
KNOW THAT GOVERNMENT SUPPORT
PROGRAMMES WON'T BE ENOUGH.
HOW DO YOU PROTECT YOURSELF
FROM AN UNEXPECTED LOSS OF
INCOME?
TONY MARTIN IS A FINANCIAL
COLUMNIST FOR “THE GLOBE and
MAIL” AND CO-AUTHOR OF THE
DUMMY'S VERSION OF
“INVESTING FOR CANADIANS.”

Tony sits in the studio with Maureen. He’s in his forties, clean-shaven, with short curly brown hair. He’s wearing a gray suit, gray shirt, and patterned tie.

Maureen continues IF YOU HAVE A QUESTION ABOUT
SAVING FOR A RAINY DAY,
MUTUAL FUNDS R.R.S.P.s OR
EDUCATION SAVINGS PLANS,
GIVE US A CALL.
IN TORONTO IT'S...

A caption appears on screen. It reads "416-484-2727. 1-888-411-1234."
Then, it changes to “moretolife@tvo.org”

Maureen picks up a copy of Tony’s book and says
AND WE HAVE
COPIES OF TONY'S BOOK TO
GIVE AWAY TO FOUR LUCKY
CALLERS WHOSE QUESTIONS GET
TO AIR SO GOOD LUCK, AND
TONY, WELCOME.
HI.

Tony says HI.

Maureen says DO YOU THINK WE
HAVE GOOD REASON TO BE
WORRIED ABOUT OUR ECONOMIC
SECURITY IN THE FUTURE?

The caption changes to "Tony Martin. Financial Columnist."

Tony says I THINK A
COUPLE THINGS HAVE HAPPENED.
WE'RE ALL SUPPOSED TO BE
HAVING SORT OF SIX JOBS A
YEAR SORT OF THING, SHIFTING
BUSINESSES, SHIFTING JOBS.
BUT AT THE SAME TIME THE
ECONOMY'S DOING WELL BUT I
THINK PEOPLE ARE A LITTLE
BIT UNSURE AS TO HOW THEY'RE
SUPPOSED TO FIND THEIR NEXT
EMPLOYMENT, NEXT OPPORTUNITY
TO MAKE SOME MORE MONEY.
AND I THINK IT'S VERY WORRY
SOME FOR A LOT OF PEOPLE.

Maureen says DO YOU THINK,
TOO, IT'S WRAPPED UP IN THIS
NOTION THAT WE'VE HEARD
THAT -- READ THAT SOCIAL
SECURITY OR OLD AGE SECURITY
OR CANADA PENSION WILL RUN
DRY BY THE TIME WE'VE HIT 65?

Tony says YEAH BOTH
NOTIONS OF THE JOB FOR LIFE
IS GONE AND ALSO SORT OF THE
POST-JOB, INCOME FOR LIFE
AND YOUR COMPANY PENSION
HAVE ALSO GONE.
SO YOU'VE GOT TWO PROBLEMS.
ONE, YOU'VE GOT TO WORRY
ABOUT WHERE YOUR INCOME'S
GOING TO COME FROM TODAY AND
ARE YOU GOING TO BE ABLE TO
SAVE UP ENOUGH OF THAT TO BE
ABLE TO BUILD UP ENOUGH
RESERVE WHEN YOU'RE OLD
THEY'RE THE OLD FASHIONED
PENSION PLAN ARE NOT LONGER
GOING TO BE ABLE TO PUT ON
THE TABLE FOR YOU.

Maureen says AND APPARENTLY
US CANADIANS, ALTHOUGH WE
HAVE THE R.R.S.P., WE'RE NOT
GOOD SAVERS, OTHERWISE.

Tony says NO, WE'RE
DREADFUL SAVERS.
WE USED TO BE SAVING EIGHT,
NINE, TEN PERCENT A DECADE
OR MORE AGO.
NOW WE'RE SAVING AROUND 2 percent
AT BEST, AND THAT'S A REALLY
SMALL AMOUNT.

Maureen says AND DOES THAT
INCLUDE OUR R.R.S.P.?

Tony says YEAH, THAT'S
WHAT YOU'VE GOT LEFT OVER
OUT OF YOUR PAYCHEQUE.
NO, IT'S NOT A SEPARATE
THING.
AND IF YOU LOOK AT THE
R.R.S.P. STATS, THEY'RE
EQUALLY SCARY IN SOME
FRONTS.
I MEAN, VERY, VERY FEW
PEOPLE ACTUALLY PUT IN THE
MAXIMUM.
THERE'S A HUGE AMOUNT OF
UNUSED CONTRIBUTION ROOM ON
A COMBINED TOTAL.
I HAVEN'T SEEN ANY FIGURES
FOR A PER-PERSON BUT A
COMBINED TOTAL IT'S IN THE
BILLIONS OF DOLLARS,
BASICALLY MONEY THAT WE ALL
COULD HAVE COLLECTIVELY PUT
INTO R.R.S.P.s BUT HAVEN'T
BEEN ABLE TO.

Maureen says NO, INSTEAD WE
BOUGHT BOATS OR CLOTHES OR
IN SOME CASES WE'RE JUST
TRYING TO PAY THE MORTGAGE.
IT'S NOT EASY.
SO WHAT'S YOUR ADVICE TO
PEOPLE?
SHOULD WE BE PUTTING ASIDE
MONEY FOR A “RAINY DAY.”
SEPARATE FROM A R.R.S.P.?

Tony says WELL AN
EMERGENCY FUND IS A GOOD
IDEA.
IT'LL GIVE YOU SOME PEACE OF
MIND.
WHEN A LOT OF PEOPLE TALK
ABOUT FINANCES AND MONEY,
THE PSYCHOLOGICAL ASPECT IS
REALLY SET ASIDE AND IT'S A
AS IF WE'RE SORT OF ROBOTS
WHEN IT COMES TO THIS BUT I
THINK THEY'RE VERY MUCH
INTEGRATED IN THE IN FACT IF
YOU TRY TO SEPARATE OUT
HUMAN BEINGS FROM THEIR
MONEY AND HOW THEY OPERATE,
THAT'S REALLY WHERE THE
PROBLEMS ARISE.
ANY PROBLEMS OF CREDIT CARDS
OR OVER SPENDING OR UNDER
SPENDING, EVEN.
IT REALLY COMES DOWN TO
EMOTIONS AND PERSPECTIVE AND
PSYCHOLOGY AND HOW DO YOU
THINK AND WORK WITH YOUR
MONEY SO AN EMERGENCY FUND,
I THINK, IS A GREAT IDEA
BECAUSE AS YOU SAID, IF
YOU'RE IN THIS ECONOMY WHERE
YOU'RE SHIFTING JOBS AND SO
FORTH IT CAN PROTECT YOU ON
THE DOWN SIDE IT.
CAN ALSO ACTUALLY OPEN UP
SOME DOORS.
FOR EXAMPLE LET'S SAY YOU
WANT TO START A SMALL
BUSINESS OR YOU'RE THINKING
OF A NEW OPPORTUNITY BUT THE
SALARY'S LESS.
IF YOU HAVE SOME MONEY SET
ASIDE WHERE YOU THINK WELL,
IF EVERYTHING REALLY DOESN'T
WORK OUT, LET'S SAY I JUMP
TO THE COMPANY AND THEY
CLOSE THE DOORS AFTER THREE
MONTHS, YOU'VE GOT A LITTLE
CUSHION THERE.
SO IT ACTUALLY MIGHT IN THE
END HELP YOU ACTUALLY PUT
MORE MONEY AWAY AND DO
BETTER IN YOUR CAREER.
SO I THINK IT'S A VERY GOOD
IDEA.

Maureen says AND WHAT'S THE
RULE OF THUMB?
SHOULD IT BE TWO MONTHS'
SALARY OR THE EQUIVALENT OF THAT?

Tony says RULE OF
THUMB CAN RUN FROM THREE
MONTHS TO SIX MONTHS BUT
AGAIN, HERE'S WHAT'S
INTERESTING.
YOU READ SOME THINGS, YOU
NEED THREE MONTHS AND IT
NEEDS TO BE THIS MUCH MONEY
AND YOU NEED TO HAVE IT IN A
BANK ACCOUNT.
WELL, THAT'S TRUE, BUT YOU
ALWAYS HAVE TO LOOK AT YOUR
CIRCUMSTANCES.
FOR EXAMPLE, IF YOU WERE
LUCKY ENOUGH TO HAVE HUGELY
RICH PARENTS WHO WERE JUST
CONSTANTLY TRYING TO PRESS
MONEY ON YOU, YOU DON'T NEED
AS MUCH BECAUSE YOU COULD
USE THEM, YOU COULD GO TO
THEM AND SAY LOOK, I DON'T
HAVE AN EMERGENCY FUND
BECAUSE I'VE MAXIMIZED WHAT
I CAN PUT INTO MY R.R.S.P.,
I'VE RUN INTO SOME ROUGH
TIMES, WOULD YOU LENDS ME
SOME MONEY?
YOU MAYBE WORK OUT AN
INTEREST PAYMENT, MAYBE YOU
DON'T AND YOU CAN WORK IT
THAT WAY.
IF YOU'VE GOT SOME
NON-REGISTERED INVESTMENTS
SIGNATURE IDLE, YOU CAN KEEP
THEM AS YOUR EMERGENCY FUND.
AND WORST CASE TO -- IF
WORST CASE COMES UP AND
YOU'RE REALLY PRESSED, YOU
PUT THE MONEY IN THE
R.R.S.P., BECAUSE ONE THING
THAT HAPPENS IS IF YOU'RE
REALLY STUCK FOR A COUPLE
YEARS, YOUR INCOME DROPS SO,
THEY CAN THEN YOU CAN TAKE
THE MONEY OUT OF YOUR
R.R.S.P., PAY PRECIOUS
LITTLE, IF ANY TAX ON IT AND
USE THAT AS YOUR LIVING
EXPENSES.
MEANWHILE YOU HAVEN'T HAD TO
GIVE UP THE BREAK IN ORDER
TO BUILD THE EMERGENCY FUND.

Maureen says SO -- BECAUSE IF
WE DON'T PUT IT IN THE
R.R.S.P. THERE IS NO TAX
DEDUCTION FOR THIS MONEY
AND --

Tony says YEAH, NO,
IT'S JUST SITTING THERE IDLE
AND IF YOU PUT IT IN AN
INTEREST-BEARING ACCOUNT --
THAT'S THE OTHER PROBLEM.
YOU'VE GOT TO PUT IT INTO
SOMETHING WHERE WHEN THE
HAMMER FALSE, YOU CAN GET IT
AT IT THE NEXT DAY.
SO YOU DO NOT GO AND PUT IT
IN THE STOCK MARKET, BECAUSE
TOMORROW THE STOCK MARKET
COLLAPSES, YOU LOSE YOUR JOB,
GO TO TAKE THE MONEY OUT AND
IT'S WORTH HALF OF WHAT IT
WAS.
THAT'S NOT REALLY MUCH HELP
SO YOU REALLY NEED TO PUT IT
IN A VERY STABLE THING.
USUALLY USUALLY, BASICALLY,
A MONEY MARKET MUTUAL FUND
OR ONE OF THESE HIGH
INTEREST SAVINGS ACCOUNTS.
PROBLEM IS, THOUGH THAT
RINGS UP SOME INTEREST WHICH
IS LOVELY BUT THAT GETS
TAXED AT YOUR HIGHEST RATE
SO YOU'RE REALLY NOT GOING
TO MAKE IT GROW MUCH.
SO IT'S A GREAT IDEA TO HAVE
IT BUT YOU CAN'T MAKE IT DO
BOTH THINGS.
YOU CAN'T MAKE IT -- SAY
WELL AS LONG AS I DON'T NEED
IT I'M GOING MAKE IT GROW
AND INVESTMENT.

Maureen says IT'S NOT AN
INVESTMENT, IT'S JUST --

Tony says IT'S PART
SAFE MONEY.

Maureen says SPEAKING OF THE
STOCK MARKET, IT'S NOT
REALLY IN THE NEWS MUCH
THESE DAYS WHAT'S IT DOING?

Tony says YOU KNOW, I
HATE TO GET INTO A STOCK
MARKET FORECASTING, BECAUSE
EVERYBODY'S ALWAYS PROVEN
WRONG AND I LOATHE BEING
PROVED WRONG, BUT IT'S
REALLY TRYING TO, IN A SENSE,
AS STOCK MARKET PHRASEOLOGY
WOULD HAVE IT IT'S TRYING TO
FIND ITS DIRECTION.
WHICH WOULD MEAN THERE'S
ENOUGH PEOPLE OUT THERE WHO
THINKS THE HIGH-TECH STUFF
IS STILL OVERBLOWN AND THE
ECONOMY IS GOING TO SLOW SO
WE'RE GOING TO SEE SOME
PROPERTIES COME DOWN AND
YOU'RE GOING TO SEE THE
STOCK MARKET COLLAPSE A BIT
FURTHER.
ON THE OTHER HAND, YOU START
TO SEE SOME THING, THE
NASDAQ IS WAY DOWN OFF ITS
HIGH, THERE'S STILL
GOOD-BYES OUT THERE, A LOT
OF THINGS LIKE MICROSOFT,
LEADING COMPANIES HAVE BEEN
KNOCKED WAY DOWN, THIS IS
THE TIME FOR RETRENCHING AND
GOING BACK UP.
THE FACT OF THE MATTER IS
I'M LOATHE TO MAKE THOSE
PREDICTIONS BECAUSE BY AND
LARGE THEY'RE ALWAYS
HOPELESSLY INACCURATE.

Maureen says SO YOU CAN'T SAY
RIGHT NOW WE'RE IN A BEAR OR BULL.

Tony says NO, THERE'S
NO CLEAR TREND IN THAT REGARD.
I SAW A HEADLINE THE OTHER
DAY SAYING THE BEAR IS HERE,
IT'S JUST NOBODY'S FIGURED
IT OUT YET AND THEN I SAW A
HEADLINE IN THE GLOBE
YESTERDAY SAYING IT'S A
STEALTH BULL.
NORTH TELL'S FALLING BUT THE
MARKET'S REALLY RISING.
BUT AGAIN, I'M OF THE MIND
THAT THAT STUFF IS REALLY
NOT OF MUCH USE TO MOST
PEOPLE BECAUSE AGAIN, YOU
GET ANYWHERE CLOSE TO THAT,
YOU'RE STARTING TO TRY TO
TIME THE MARKET AND NOBODY
CAN DO THAT YOU'RE TRYING TO
SAY GEEZ, I THINK IT'S GOING
TO DO THIS.
IF YOU THINK BACK A COUPLE
YEARS AGO, PEOPLE WERE
TALKING ABOUT THE DO YOU
GETTING UP, WENT UP -- WOULD
IT BREAK TEN?
WELL IT DIDN'T, DIDN'T, THEN
WE'RE UP TO ELEVEN.
SO A WHOLE BUNCH OF PEOPLE
PUT IN MONEY AND IT
RETRENCHED THE GAINS ALMOST
IN A COUPLE MONTHS.

Maureen says COMMON SENSE
FINANCIAL ADVICE IS WHAT
TONY MARTIN IS OFFERING THIS
AFTERNOON.
TONY IS CO-AUTHOR OF
“INVESTING FOR CANADIANS FOR
DUMMIES” AND WE HAVE FOUR
COPIES OF HIS BOOK TO GIVE
AWAY THIS AFTERNOON.
WE'LL DRAW NAMES FROM THOSE
WHOSE CALLS OR E-MAILS GET
TO AIR.
HERE ARE THE NUMBERS.

The numbers and email reappear briefly.

Maureen continues YOUR QUESTIONS ABOUT YOUR
PERSONAL MONEY MATTERS FOR
TONY says AND MIKE IS IN CHATHAM.
HI MIKE, WELCOME.

The Caller says GOOD AFTERNOON,
MAUREEN.
FIRST OF ALL I LIKE YOUR NEW
SET IT.
LOOKS GREAT.

Maureen says YOU LIKE IT?

The Caller says VERY GOOD.

Tony says WHAT ABOUT THE HAIR?

The Caller says I LOVE THE HAIR.
IT MAKES YOU LOOK TEN YEARS
YOUNGER.

Maureen chuckles and says GOOD ANSWER!

The Caller says I DON'T KNOW
WHETHER YOUR GUEST ANSWERED
MY QUESTION IN HIS PREAMBLE
OR NOT, I'M NOT EXACTLY
SURE.
YEARS AGO MY WIFE TOOK ME
ASIDE AND SLAPPED ME UPSIDE
THE HEAD AND SAID “YOU ARE
NOW GOING TO START PUTTING
MONEY INTO R.R.S.P.s” SO
OVER THE LAST NUMBER OF
YEARS THAT'S WHAT WE'VE BEEN
DOING, PUTTING IN THE
MAXIMUM EACH YEAR BETWEEN
SAY THREE AND FOUR THOUSAND
DOLLARS, DEPENDING ON WHAT
IT WAS.
I HAD TO RETIRE EARLY
BECAUSE OF MEDICAL REASONS.
I'M ONLY 54.
SO I HAVE ALL THIS MONEY IN
THE R.R.S.P.s.
IS THERE ANYTHING I CAN DO
WITH IT NOW, BEFORE THE
NORMAL TIME THAT YOU'D BE
TAKING IT OUT?

Tony says ABSOLUTELY,
YOU CAN START SPENDING IT
LIKE MAD TODAY.

The Caller says YOU CAN?

Tony says YEAH.
THERE'S NO RULES DEFINING
WHEN YOU CAN AND CANNOT TAKE
MONEY OUT OF AN R.R.S.P.
IT'S UNLIKE YOUR COMPANY
PENSION WHICH WILL BASICALLY
SAY YOU CAN'T GET AT IT
BEFORE A CERTAIN AGE AND IF
YOU DO, WE'RE GOING TO
LESSEN THE.
A SAME WITH THE CANADIAN
PENSION PLAN BUT THE
R.R.S.P. IS REALLY YOURS TO
CONTROL.
SO YOU REALLY ARE ABLE TO --
THE ONLY RESTRICTIONS ON IT
IS THAT YOU CAN'T RUN IT
PAST 69.
THEN THE GOVERNMENT SAYS,
YOU KNOW, ENOUGH IS ENOUGH,
YOU GOTTA TAKE IT OUT AND DO
SOMETHING ELSE WITH IT.
BUT YOU COULD TAKE OUT 10 dollars,
YOU COULD TAKE OUT ALL OF IT
THIS YEAR.
ONLY THING IS IT COUNTS AS
REGULAR INCOME.
REGARDLESS OF -- LET'S SAY
YOU PUT 10 dollars IN AND IT GOES
INTO 1000 dollars BECAUSE IT HAD
BEEN IN A STOCK.
SO 90 dollars HERE WOULD BE CAPITAL GAIN.
IT DOESN'T MATTER HOW THE
MONEY KUM LATE, IT'S ALL
TREATED AS REGULAR INCOME
AND TAXED AS IF IT WAS
SALARY OR INTEREST.

The Caller says SO LET'S JUST SAY
FOR EXAMPLE, I GET A REDUCED
PENSION FROM WHERE I WORK,
SO THAT'S MY LIVING
EXPENSES.
BUT LET'S SAY I WANTED TO
TAKE MY WIFE AND MYSELF ON
VACATION.
I COULD TAKE OUT THREE OR
FOUR OR FIVE THOUSAND, AND
IT WOULD BE TAXED RIGHT THEN
OR -- YOU PAY A TAX RIGHT AT
THAT POINT OR LATER?

Tony says WELL, A BIT
OF BOTH, ACTUALLY.
WHAT HAPPENS IS WHEN YOU
COME IN TO DO YOUR TAX THE
NEXT YEAR, YOU HAVE TO SAY
WHAT DID I MAKE I MADE THIS
I MADE THAT I HAD A JOB, AND
I MADE “5,000 BUCKS.”
BECAUSE THAT'S WHAT I TOOK
OUT OF MY R.R.S.P.
SO THAT'S ROLLED INTO THE
BIG SUM OF EVERYTHING YOU'VE
EARNED THAT YEAR.
THEN YOUR TAX RATE IS
CALCULATED ON THAT AND THE
TAX BILL'S WORKED OUT.
BUT WHEN YOU TAKE MONEY OUT
OF AN R.R.S.P., THERE'S
ACTUALLY SOMETHING CALLED A
WITHHOLDING TAX SO BASICALLY
IT'S SORT OF CONSTRUCTED SO
THAT YOU DON'T COMPLETELY
PUT YOURSELF INTO A SEWAR,
REALLY.
THE FINANCIAL INSTITUTION
HAS TO HOLD BACK A LITTLE
BIT OF IT IN ORDER -- THEY
BASICALLY SAY -- I THINK
IT'S 10 percent UP TO 5,000 dollars, AND
THEY SET IT ASIDE IN YOUR
NAME AND GIVE IT TO THE
GOVERNMENT SO WHEN YOUR TAX
BILL COMES, YOU'VE SORT OF
MADE 5,000 dollars OF INCOME BUT
ALREADY PAID SOME SOME TAX
ON IT.
YOU WANT TO WATCH THAT I
THINK THE CUT-OFF LINES ARE
5,000 dollars SO, IN FACT IF YOU
WANT TO TAKE OUT 10,000 dollars,
YOU TAKE OUT TWO SETS OF
5,000 dollars BECAUSE THE
WITHHOLDING TAX RATE RISES.

Maureen says YOU CAN DO THAT?
TAKE IT OUT ONE DAY AND GO
BACK THE NEXT DAY --

Tony says YEAH, IT'S
THE ONE-CHUNK TIMES AND THEY
LOOK AT THEIR TABLES.

Maureen says SO THE
GOVERNMENT DOESN'T CARE WHEN
YOU RETIRE OR EVEN IF YOU
RETIRE, THEY'RE JUST GOING
TO START TAXING YOU ON THAT
BECAUSE THE TAX IS DEFERRED
IS THAT RIGHT?

Tony says YEAH, YEAH.
YOU CAN BASICALLY -- YOUR
R.R.S.P. IS YOURS TO DO WITH
WHAT YOU WISH, AND THE ONLY
THING, IS AS I SAID, WHEN
IT'S TAXD, IT'S TAXD AT YOUR
FULL MARGINAL RATE SO YOU
WANT TO LEAVE THINGS IN
THERE, IF YOU CAN.
THE OTHER THING IS ONCE YOU
TAKE IT OUT, LET'S SAY YOU
TAKE OUT 10,000 dollars AND YOU
DON'T NEED IT YOU CAN'T
STICK IT BACK IN YOU CAN'T
SAY OH, WE DIDN'T GO ON THAT
HOLIDAY SO I WANT TO PUT IT
BACK IN UNLESS YOU HAVE THE
CONTRIBUTION ROOM, IN OTHER
WORDS UNLESS YOU'VE EARNED
SOME MORE MONEY AND BUILT UP
SOME MORE ROOM, YOU CAN'T
JUST SORT OF WASH IT BACK IN
AND OUT.
IT COMES OUT, IT'S INCOME.
IT GETS TAXED.
YOU WANT TO PUT SOME MORE IN
YOU BETTER HAVE SOME MORE
NEW CONTRIBUTION ROOM.

Maureen says IT GETS
COMPLICATED THOUGH BECAUSE
HE HAS A COMPANY PENSION
PLAN, HE'S TAKING A LOWER
AMOUNT BECAUSE HE RETIRED
EARLY.
DOES THAT EARN HIM ROOM IN
HIS R.R.S.P.

Tony says FOR EARNED NK?

Maureen says YEAH.

Tony says NO, I DON'T
THINK THEY DO.
ONE INTERESTING QUESTION,
WHEN YOU TAKE R.R.S.P. MONEY
OUT, IT'S REALLY MONEY
YOU'VE ACTUALLY GONE OUT AND
REALLY EARNED.
THAT'S THE BEST WAY TO THINK
OF IT.

Maureen says THANKS, MIKE,
FOR THE QUESTION.
HAVE A NICE HOLIDAY.
SUE IS IN SCARBOROUGH.
HI SUE.

The Caller says OH, HELLO.
I WAS CALLING ABOUT DIVIDEND
REINVESTMENT PLANS AND I
WONDERED IF YOUR GUEST
RECOMMENDED THEM.
AND I HAVE SOME AND THEY'RE
TAXED AT DIVIDENDS.
YOU'RE PAID IN STOCK, BUT
WHEN I COLLAPSE THE PLAN,
HOW IS IT TAXED?

Tony says WHAT SHE'S
TALKING ABOUT IS SOMETHING
CALLED A D.R.I.P., A
DIVIDEND REINVESTMENT PLAN
SO LET'S SAY YOU OWN BANK OF
MONTREAL STOCK AND EVERY
YEAR THEY PAY OUT 2 dollars FOR
EACH STOCK YOU OWN.
INSTEAD OF HAVING THE 2 dollars
PAID OUT, THEY CAN TAKE THAT
2 dollars AND BUY A FRACTION OF
WHATEVER THE STOCK'S TRADING
AT THAT DAY.
LET'S SAY THE STOCK'S
TRADING AT 20 dollars, THEY BUY YOU
A TENTH OF A STOCK SO YOU
GET THESE FUNNY LITTLE BITS
OF STOCK ALL OVER THE PLACE,
IT SAVES YOU COMMISSION FEES
AND LET'S YOU BUILD UP YOUR
POSITION ALSO LET'S YOU WORK
FOR DOLLAR COST AVERAGING
BECAUSE EVERY TIME A
DIVIDEND IS MEANT TO BE PUT
OUT THEY BUY THE STOCK,
REGARDLESS OF THE PRICE SO
YOUR QUESTION IS WHEN YOU
CASH-OUT, HOW ARE YOU TAXED?

Maureen says IS THAT RIGHT, SUE?

The Caller says THAT'S RIGHT.
BECAUSE YOU'RE TAXED AS A
DIVIDEND AT THE END OF THE
YEAR ANYWAY.

Tony says SO YOU PAY
YOUR DIVIDEND TAX AND THAT'S
WHERE IT GETS VERY
COMPLICATED, ACTUALLY,
BECAUSE YOU'VE GONE AND
BOUGHT A WHOLE BUNCH OF
STOCK AT SLIGHTLY DIFFERENT
PRICES, RIGHT?

The Caller says YES SO, HOW DO
THEY WORK IT OUT?

Tony says WELL,
SOMEBODY WILL HAVE IT DOWN
ON PAPER, WHETHER IT'S YOUR
BROKER OR THE D.R.I.P.
ADMINISTRATOR AND WILL BE
ABLE TO TELL YOU WHAT YOUR
AVERAGE COST PER SHARE WAS
AND WORK IT OUT THAT WAY.

The Caller says SO WHEN YOU SELL,
YOU HAVE TO CONTACT THEM,
FIND OUT THE AVERAGE BRIs
PRYCE AND WORK IT OUT
YOURSELF AND THEN DECLARE IT.

Tony says YEAH, CAN
IT'S ALL CAPITAL GAINS AT
THAT POINT BECAUSE YOU'VE
ALREADY PAID THE DIVIDEND TAX.

The Caller says I SEE.
THANK YOU VERY MUCH.

Maureen says THANKS SEA SUE.
BYE-BYE.

The Caller says BYE-BYE.

Maureen says OKAY, ALICE IS
IN RICHMOND.
HELLO, ALICE.

The Caller says HELLO?

Maureen says HI ALICE.
GO RIGHT AHEAD.

The Caller says YES, WE HAVE MOST
OF OUR MONEY INVESTED IN
R.R.S.P.s AND G.I.C.s.
A COUPLE IN NATIONAL BONDS.
MY DAUGHTER THINKS I SHOULD
DIVERSIFY AND GO INTO MUTUAL
FUNDS AND STOCK.
I DON'T THINK SO.
WE'RE IN OUR MID-70s, AND I
THINK WE'RE DOING FINE THE
WAY WE ARE.
WHAT DO YOU THINK?

Tony says HOW ARE YOU
DOING FOR LIVING EXPENSES?
WHAT ARE YOU PAYING YOUR
LIVING EXPENSES WITH?

The Caller says INTEREST ON WHAT'S COMING IN.

Tony says AND HOW ARE
YOU DOING?
ARE YOU -- YOU'VE GOT --

The Caller says WE'RE DOING FINE.

Tony says AND YOU'RE
IN YOUR MID-70s?

The Caller says MM-HMM.

Tony says AND YOU WANT
TO HAVE -- ARE THERE ANY BIG
THINGS THAT YOU WANT TO DO
THAT YOU COULDN'T DO OFF THE
INCOME THAT YOU'VE GOT?

The Caller says NO.

Tony says SO THERE'S
NO UPSIDE HERE, IS THERE?

The Caller says NO.
EVERYTHING'S GOING ALONG ALL
RIGHT.

Tony says ONE OF THE
RULES ABOUT ALL THIS STUFF,
EVERYBODY KEEPS TALKING
ABOUT BETTER RETURNS AND
BIGGER RETURNS AND HIGH
PERFORMANCE AND SUCH, BUT
THAT ALWAYS COMES WITH MORE
RISK.
THERE'S TWO ISSUES HERE.
FIRST OF ALL, DO YOU HAVE
ENOUGH TIME TO LET IT SIT?
IF YOU'RE IN YOUR MID-70s,
WITH ALL DUE RESPECT, YOU
DON'T HAVE AS LONG TO LIVE,
HOPEFULLY, AS WE DO.
SO WHAT THAT MEAN IS, LET'S
SAY YOU DUMP IT INTO HEALTH
STOCK AND YOUR HEALTH
DECLINES, AND THEN IN FOUR
YEARS THE MARKET'S IN THE
TOILET, YOU DON'T WANT TO
GET AT IT THAT WAY AND
YOU'VE TAKEN A RISK YOU
PERHAPS DON'T NEED TO TAKE.
BUT THE OTHER INTERESTING
THING IS IF YOU DON'T NEED
TO TAKE THE SCOMPRIVEG
YOU'RE NOT INTERESTED IN
MAKING IT GROW FOR YOUR KIDS,
THEN WHY BOTHER?
YOU'RE GOING TO LOSE SLEEP,
IT DOESN'T SOUND LIKE YOU
NEED THE STRESS.
NOW THE ONLY SORT OF SIDE
NOTE TO THIS WOULD BE THAT
IF YOU WANTED TO -- IF
YOU'VE GOT ENOUGH MONEY
COMING IN OFF YOUR FIXED
INCOME STUFF AND YOU HAVE
SOME MONEY THAT YOU COULD
PUT INTO STOCKS, THEN YOU
COULD ESSENTIALLY THINK OF
IT NOT SO MUCH THAT YOU'RE
INVESTING IT FOR YOUR
TIMEFRAME, YOU'RE INVESTING
IT FOR YOUR KIDS' TIMEFRAME,
BECAUSE YOU COULD
ESSENTIALLY LEAVE IT TO
THEM.
SO YOU COULD BUY STOCK
TODAY, AND IT MIGHT GO UP,
AND IT MIGHT EVEN GO DOWN,
AND IT MIGHT BE WORTH LESS
WHEN YOU DIE BUT SO WHAT
BECAUSE IT'S GOING GO TO
YOUR KIDS AND THE IDEA IS
YOU'VE TAKEN A LONG JANE
CHANCE.
SO THERE MAY BE SOME USE IN
CONSIDERING TURNING YOUR
MIND TO YOUR KIDS'
PERSPECTIVE IN TERMS OF HOW
MUCH YOU'RE GOING TO LEAD TO
THEM AND INVESTING IT WITH
THEIR TIMEFRAME --

Maureen says AS LONG AS IT
DOESN'T JEOPARDIZE THEIR
STANDARD OF LIVING RIGHT
NOW.
NOW SHE MENTIONED WE HAVE
MOST OF OUR MONEY IN
R.R.S.P.s AND G.I.C.s, BUT
IN THEIR 70s WOULDN'T THAT
BE A R.I.F.F.?

Tony says YOU'RE IN A
R.I.F.F., ARE YOU NOT NOW?

Maureen says I DON'T KNOW IF
SHE'S STILL THERE.

The Caller says YES, I AM.

Tony says YOU'RE IN A
REGISTERED RETIREMENT INCOME
FUND NOW, RIGHT?

The Caller says YES.

Tony says BASICALLY AN
R.R.S.P. IS A REGISTERED
RETIREMENT SAVINGS PLAN AND
A R.I.F.F. IS A REGISTERED
RETIREMENT INCOME FUND SO
REALLY ONE IS YOU'RE PUTTING
MONEY AWAY AND SAVING IT THE
OTHER ONE, YOU'RE PAYING
YOURSELF OUT.
SO THAT'S THE EASIEST WAY TO
REMEMBER THEM.
SAVINGS VERSUS INCOME.

Maureen says WITHIN THAT
R.I.F.F. THEY COULD HAVE
INVESTMENTS IN MUTUAL FUND,
COULDN'T THEY?

Tony says OH, ABSOLUTELY.
THERE USED TO BE A FEW MORE
RESTRICTIONS BUT BASICALLY
YOU CAN HOLD ANYTHING IN
SIDE OF R.I.F.F. THAT YOU
COULD IN AN R.R.S.P.
NOW YOU MAY NOT WANT TO
BECAUSE YOU MAY WANT TO TURN
IT INTO SOMETHING THAT'S
GOING TO BE MORE RETURNABLE
INTO CASH EARLIER ON AND THE
REAL BIG DIFFERENCE IS WITH
AN R.R.S.P. YOU CAN KEEP
PUTTING MONEY IN, WITH A
R.I.F.F. YOU CAN'T, AND IN
FACT YOU'RE REQUIRED TO TAKE
IT OUT IN CERTAIN MINIMUMS
EACH YEAR.

Maureen says HOW OLD ARE YOU
GOING TO BE WHEN YOU START
TO SAY TO YOURSELF I'VE GOT
TO CUT MY RISK AND START
INVESTING IN THINGS THAT ARE
MORE SECURE, LIKE G.I.C.s?
WHAT BENCHMARK ARE YOU USING?

Tony says I DON'T HAVE
A BENCHMARK, PRECISELY FOR
THE RESPONSE WE GAVE THAT
WOMAN.
IF I STUMBLE ACROSS SOME DOT
COM TOMORROW AND BECOME A
MILLIONAIRE, I'M NOT GOING
TO WORRY ABOUT THAT AND
INVEST ALL MY MONEY FROM MY
KIDS' PERSPECTIVE.
ON THE OTHER HAND IF I
DECIDE I'M GOING TO SIT ON A
BEACH AND MAKE 20 dollars A YEAR,
I'M GOING TO BE VERY, VERY
CAREFUL AND START PROTECTING
MY MONEY EARLIER ON.
SO YOU REALLY HAVE TO LOOK
AT YOUR INCOME NEEDS.
ARE THEY BEING MET, BEING
MET SAFELY AND WHAT ARE YOU
GOING TO DO WITH THE REST?
DO YOU LIKE THE STRESS?
DO YOU FIND THE STOCK MARKET
INTERESTING AND WHAT DO YOU
WANT TO DO FOR YOUR KIDS?

Maureen says OKAY.
ALL RIGHT, GOOD.
HOPE THAT HELPS, THANKS,
ALICE.
BETH IS IN WINDSOR.
HI BETH.

The Caller says HELLO.

Maureen says HI.

The Caller says WHAT I'M CALLING
ABOUT IS WE'VE GROUP THAT'S
STARTING AN INVESTMENT CLUB,
AND WE'RE ALL SORT OF
NOVICES AT THIS, AND SO
WE'VE SET SOME GUIDELINES
BUT WE'RE STILL TALKING
AROUND WHAT AMOUNTS WE WANT
TO PUT IN UP FRONT, LIKE THE
STOCKS AND WHAT WE SHOULD
SORT OF STEER TOWARDS, AND
THE OTHER THING IS I
WONDERED IF YOUR BOOK COVERS
INVESTMENT CLUBS, AND IF
THAT SHOULD BE OUR FIRST
INVESTMENT, IS YOUR BOOK.

Tony says WELL OF
COURSE MY BOOK SHOULD BE --
ACTUALLY NONKT ALL JOKING
ASIDE IT'S NOT BAD BOOK TO
START WITH.
IT DOESN'T DEAL DIRECTLY
WITH INVESTMENT CLUBS BUT
DOES TALK IN DEPTH ABOUT HOW
TO APPROACH ANALYZING STOCKS
WHICH IS REALLY WHAT YOU
WANT TO GET A HANDLE ON.
IT DOES GO THROUGH THE
FUNDAMENTALS ABOUT HOW YOU
CAN GO AND DO IT IT GIVES
YOU ALSO SOME ADVICE IN
TERMS OF GOOD INFORMATION
SOURCES, SUCH AS THE
CANADIAN SHARE OWNERS
ASSOCIATION UP HERE THAT
DOES A LOT OF THE BASIC WORK
FOR YOU.
WHEN I SPEAK OF THE CANADIAN
SHARE OWNERS ASSOCIATION,
THEY ACTUALLY HAVE A BOOKLET
ON HOW TO START AND RUN AN
INVESTMENT CLUB.

Maureen says THAT'S SHARE OWNERS?

Tony says I'M NOT SURE
IF THERE'S AN S AT THE END,
BUT IF YOU'RE ON THE
INTERNET, FOR EXAMPLE THE
CANADIAN SHARE OWNERS
ASSOCIATION.
IT'S OUT OF TORONTO, AND
THEY ALSO ARE ON THE WEB,
AND I THINK IT'S, UH,
SHAREOWNER.CA, I THINK.
SO THEY'RE A GOOD PLACE TO
START FOR A CANADIAN THING.
THERE'S ALSO A NON-PROFIT
ORGANIZATION OUT OF STATES,
AN INVESTMENT CLUB
ASSOCIATION.

Maureen says OKAY.
ANY GENERAL ADVICE FOR
PEOPLE STARTING UP AN
INVESTMENT CLUB AS FAR AS
HOW MUCH MONEY THEY OUGHT TO
PLAY AROUND WITH?

Tony says WELL, YOU
SORT OF HAVE TO HAVE ENOUGH
MONEY TO MEET YOUR GOALS.
SO THAT -- LIKE MOST OF THE
THINGS I ALWAYS YABBER ABOUT,
REALLY YOU HAVE TO TAKE A
COUPLE STEPS BACKWARDS AND
THINK WHAT IS THE GOAL HERE?
IS IT TO HAVE A DIVERSIFIED
PORTFOLIO WE'RE ALL GOING
INVEST IN AND GET RICH
OVERTIME?
OR IS A GOAL TO GO AND
INVEST IN ONE OR TWO STOCKS
TO LEARN ABOUT THINGS AND WE
DON'T REALLY CARE HOW MUCH
WE END UP WITH?
SO IF YOU WANT TO DIVERSIFY,
YOU OBVIOUSLY NEED TO HAVE
MORE MONEY.
IF YOU'RE ONLY INTERESTED IN
ONE OR TWO STOCKS AND YOU
WANT TO SEE WHAT HAPPENS,
YOU NEED LESS MONEY.

Maureen says GIVE ME A WILD
AMOUNT IS 500 dollars ENOUGH?
1,000?
2,000?

Tony says IF YOU
WANTED TO USING A DISCOUNT
BROKER YOU PROBABLY TO WANT
PUT 2,000 dollars INTO A STOCK,
BECAUSE THE COMMISSIONS ARE
ABOUT 29 dollars THESE DAYS, YOU
PROBABLY WOULDN'T WANT TO
PUT MUCH LESS THAN THAT INTO
AN INDIVIDUAL STOCK.
AND, YOU KNOW, THERE ARE ALL
SORTS OF NUMBERS OUT THERE.
BUT YOU PROBABLY WANT TO BE
COMFORTABLE WITH SOMEWHERE,
TEN, TWELVE STOCKS MINIMUM.

Maureen says OKAY, GOOD.
GOOD LUCK, BETH.
THANKS FOR CALLING.
JULIE IS IN WHITBY.
HELLO, JULY LEELY?

The Caller says HELLO.

Maureen says HI.
I JUST --

The Caller says I JUST WANTED TO ASK YOU,
I'M IN THE UNENVIABLE
POSITION OF BEING ALMOST IN
MY MID-40s, NO SAVINGS ASIDE,
JUST COME OUT OF COLLEGE AND
UNEMPLOYED.
TO PUT IT BLUNTLY, I DON'T
EVEN HAVE A DRIVER'S
LICENSE.
WHAT IS MY BEST BET TO SEE
WHAT I CAN DO AS FAR AS
GETTING SOME RETIREMENT
MONEY PUT ASIDE.

Tony says START AN
R.R.S.P..

The Caller says THAT'S IT?

Tony says YEAH, ABSOLUTELY.
WHAT YOU WANT TO DO IS YOU
WANT TO REALIZE THAT YOU'VE
GOT -- YOU'RE IN YOUR
MID-40s SO, LET'S SAY YOU
WORK UNTIL 65, 70, OKAY?
ONE BASIC CONCEPT THAT IF
YOU MAKE 10 percent ON YOUR MONEY,
IT'LL DOUBLE EVERY SEVEN
YEARS, OKAY?
SO IF I DO MY MATH RIGHT,
SEVEN, 14, 21, 28, 68... SO
YOU'VE GOT ALMOST THREE AND
A HALF DOUBLINGS.
SO IF YOU PUT -- LET'S SAY
YOU PUT 10,000 dollars AWAY TODAY,
YOU'D HAVE TWENTY, FORTY,
EIGHTY, AH... A HUNDRED AND
A QUARTER OR SO.
IF YOU PUT 10,000 dollars AWAY AND
YOU JUST LET IT EARN AND YOU
GOT 10 percent ON AVERAGE A YEAR.
SO WHAT YOU HAVE TO THINK
ABOUT IS THAT YOU ACTUALLY
HAVE A GOOD AMOUNT OF TIME
TO GET COMPOUNDED WORKING
FOR YOU.
YOU OBVIOUSLY WOULD HAVE
BEEN BETTER -- I MEAN ALL OF
THESE MODELS ARE HORRIBLE
BECAUSE THEY'RE TYPICALLY
DRAWN OUT WHEN YOU'RE 20 AND
SAY LOOK HOW MUCH MONEY YOU
HAVE.
BUT NOT A LOT OF PEOPLE HAVE
MONEY WHEN THEY'RE 20 OR THE
BRAINS TO PUT IT AWAY OR
THE -- USUALLY THERE'S OTHER
NEEDS.
SO YOUR BIGGEST ASSET RIGHT
NOW IS THAT YOU'RE ASKING
THESE QUESTIONS.
RATHER THAN GETTING
DEPRESSED ABOUT IT OR
THINKING ABOUT IT WHEN
YOU'RE 55.
SO WHEN YOU GET YOUR FIRST
PAYCHEQUE WHAT YOU SHOULD DO
IS WORK IT BACKWARDS, THINK
OF THIS says HOW MUCH THIS CAN I
PUT AWAY AND GET IT DIRECTED
RIGHT IN YOUR PAYCHEQUE --
SORRY, RIGHT IN THE R.R.S.P.
SO, IT COMES RIGHT OFF YOUR
PAYCHEQUE, YOU NEVER EVEN
SEE THE MONEY, YOU LIVE TO
DEAL WITH ON WHAT'S LEFT
OVER AND LET IT WORK FOR YOU
LIKE THAT.

Maureen says SHOULD SHE BE
MORE AGGRESSIVE THAN MOST
PEOPLE BECAUSE SHE'S GOT A
SHORTER PERIOD OF TIME?

Tony says IT'S A
LITTLE BIT -- SHE DOES NEED
TO BE AGGRESSIVE TO GET IT
GOING AND SO FORE, BUT
WHAT'S INTERESTING IS SHE'S
GOT MORE THAN ENOUGH TIME TO
RECOVER FROM THE STOCK
MARKET SETBACK SO IF SHE CAN
LIVE WITH THE RISKS, SHE
MIGHT TO WANT PUT MORE INTO
STOCKS, OR PUT THE GREAT
MAJORITY OF IT INTO STOCKS.
BUT AGAIN, THE STOCK MARKET
GOES DOWN TWO, THREE TIMES
EVERY DECADE, BUT OVER TIME
IT DOES THIS.
BUT SHE'S GOT AT LEAST TWO
DECADES TO WAIT FOR THE
RECOVERY, IF THERE'S EVER
ANY PROBLEM.
SO YOU'VE GOT TIME ON YOUR
SIDE, STILL.
BY FAR, I MEAN, IT'S A LOT
OF TIME LEFT IN THE BIG
WORLD.
AND DON'T GET PANICKED BY
HEADLINES SAYING YOU SHOULD
HAVE DONE THIS I MEAN HUMAN
BEINGS ARE HUMAN BEINGS AND
NOT EVERYBODY DOES WHAT
THEY'RE SUPPOSED TO DO.

Maureen says AND AS FAR AS
NOT HAVING A DRIVER DRIVER'S
LICENSE, A CAR'S JUST DRAIN
ON YOUR MONEY.

Tony says YOU SHOULD
BE REALLY GLAD YOU DON'T
HAVE A DRIVER'S LICENSE.
IF YOU HAVE ONE, THEN OFF
CAR AND YOU SPEND ALL THE
MONEY YOU COULD BE SAVE.

Maureen says ON INSURANCE AND
WHAT NOT.
BEST OF LUCK, JULIE.
THANKS FOR CALLING.
KAREN IN THUNDER BAY SAYS
“I'M A SINGLE MOTHER
RECEIVING CHILD SUPPORT
PAYMENTS.
I HAVE TO PAY A FEW THOUSAND
DOLLARS IN TAXES ON THIS
MONEY.
RATHER THAN SENDING IT IN IN
INSTALLMENTS TO THE TAX
OFFICE AND EARNING NO
INTEREST, WHERE WOULD YOU
RECOMMEND I PUT IT?
ALSO, ARE R.R.S.P.s
RECOMMENDED?”
SO I GUESS SHE'S TALKING
ABOUT UNTIL SHE HAS TO TAKE
IT OUT FOR TAXES OR
SOMETHING.

Tony says YEAH.
I MEAN AGAIN, WE TALKED
ABOUT THIS EARLIER, THAT
HAVING A PLUS TO PARK MONEY
FOR THE SHORT TERM, IF
YOU'RE GOING TO HAVE TO USE
IT FOR A SPECIFIC PURPOSE,
SUCH AS HANDING IT ALL BACK
TO THE GOVERNMENT AGAIN, YOU
REALLY CAN'T AFFORD TO TAKE
RISKS WITH IT, BECAUSE YOU
SORT OF SHOT YOURSELF IN THE
FOOT.
YOU'VE TAKEN THE MONEY, YOU
WANT TO MAKE IT GROW, AND
YET IT'S WORTH LESS, SO YOU
WOULD HAVE BEEN BETTER OFF
NOT TRYING TO MAKE IT GROW
IN THE FIRST PLACE SO
STATISTICALLY THE SHORTER
TIME YOU CAN PUT MONEY AWAY,
THE BIGGER CHANCE OF THAT
HAPPENING.
SO IT'S REALLY TOUGH TO
GET -- I WOULD JUST
RECOMMEND, HAVE IT GO RIGHT
INTO A MONEY MARKET MUTUAL
FUND OR ONE OF THESE HIGH
INTEREST SAVINGS ACCOUNTS.
THEY'RE PAGE FIVE, FIVE
PERCENT, A LITTLE BIT LOWER
THESE DAYS SO, IF YOU'RE
TAXED AT 40 percent, YOU'RE STILL
MAKE 3 percent.
IT'S NOT A GREAT BIG WOOP
BUT IT'S BETTER THAN A KICK
IN THE HEAD.

Maureen says BUT ABSOLUTELY
SAVE THAT MONEY.
TOO MANY PEOPLE I KNOW WHO
HAVE TO SEND TAXES TO THE
GOVERNMENT EVERY YEAR DON'T
SAVE IT AND THEN THEY HAVE
TO GO TO THE BANK AND BORROW.

Tony says VERY, VERY
DIFFICULT TO DO.
AND AGAIN, IT'S ONE OF THOSE
THINGS THAT IF YOU'RE
TRAINED FROM THE GET-GO
ABOUT KNEE HIGH TO DIAPERS,
AND SOMEBODY SAYS YOU'VE GOT
TO PUT MONEY AWAY AND YOU'VE
GOT TO HAVE THESE SEPARATE
ACCOUNTS... BUT I THINK,
AGAIN, IT'S MY PERSPECTIVE
THAT WE'RE JUST REALLY NOT
VERY WELL PROGRAMED TO DEAL
WITH A LOT OF THIS STUFF.
AND IT'S UNFORTUNATE.

Maureen says WHAT DO YOU
THINK IS GOING TO HAPPEN TO
INTEREST RATES OVER THE NEXT
LITTLE WHILE?
I'VE READ HEADLINES THAT
THEY'RE GOING TO FALL.

Tony says I HAVE
ABSOLUTELY NO IDEA.
I'LL TELL YOU MY STANDARD
INTEREST RATE STORIES.
WHEN I GOT MY FIRST MORTGAGE,
YEARS AGO, I TALKED TO A
VERY WELL-KNOWN PUNDIT AND
COMMENTATOR, AND I SAID “HOW
LONG SHOULD I GO FOR?”
INTEREST RATES WERE ABOUT
10.5 percent.
HE SAID GO TWO YEARS,
BECAUSE IN ONE YEAR, RATES
ARE GOING TO GO UP A LITTLE
BIT, AND THE ECONOMY'S GOING
TO SLOW DOWN AND THEN BY THE
TIME YOU RENEW THEY SHOULD
BE ABOUT 8 percent OR 9 percent.
TWO YEARS CAME AND WENT AND
I RENEWED AT 14 percent.

Maureen says OH, BOY!

Tony says AND THAT WAS
PRETTY TYPICAL.
SO I HAVE -- I DON'T HAVE A
LOT OF TIME FOR PEOPLE,
AGAIN, FORECASTING INTEREST
RATES, BECAUSE AGAIN, YOU
JUST GOT TO WORK IT THROUGH
A LITTLE BIT.
IF SOMEBODY REALLY, REALLY
COULD DO THIS STUFF, THEY
WOULD, AND THEY'D BE MAKING
A GAZILLION BILLION BUCKS
OFF THIS I MEAN THERE'S GUYS
THAT RUN BOND MUTUAL FUNDS,
WHICH IS ESSENTIALLY SOME OF
THE FUNDS JUST TRY TO BUY A
BUNCH OF BONDS AND PAY SOME
INTEREST AND HAVE LONGER
TERM AND SHORTER TERM AND
YOU GET THE AVERAGE.
SOME OF THEM ARE MORE
AGGRESSIVE, SO THEY WOULD
TRY TO SAY I THINK INTEREST
RATES ARE GOING TO FALL, SO
I'M GOING TO BUY A BUNCH OF
LONGER-TERM BONDS BECAUSE
I'LL GET A BIGGER KICK AT
THE CAN, OR I THINK INTEREST
RATES ARE GOING TO GO UP,
I'M GOING TO BUY SHORT TERM
BONDS AND WAIT UNTIL
INTEREST RATES RISE AND THEN
BUY LONGER TERM BONDS.
WELL THESE GUYS HAVE BEEN
DOING THIS THEY GOT THEIR
DATA BOOK, TECHNICAL
ANALYSIS, RESEARCH STAFF,
THEY'RE DOING IT ALL OVER
THE WORLD 24 HOURS A DAY AND
NOBODY'S REALLY BEATING THE
AVERAGES.

Maureen says WHAT WAS THE
LAST TERM YOU TOOK OUT ON
MORTGAGE?
HOW MANY YEARS?

Tony says I HAVE BEEN
GOING LIKE SIX MONTHS -- IN
FACT I JUST WENT A YEAR.
BUT I WENT -- I STARTED
GOING SIX MONTHS AND SIX
MONTHS AND SIX MONTHS AND
JUST TURNING IT AROUND.
BECAUSE YOU PAY MUCH LESS
BECAUSE YOU'RE GOING SHORT
TERM, AND IN FACT,
INTERESTINGLY ENOUGH THE
LAST YEAR OR TWO THEY'VE
ALMOST BEEN COMPARATIVE,
WHICH WOULD SUGGEST THAT THE
INSTITUTIONS ALSO THINK
THEY'RE GOING TO FAULT.
BUT AGAIN, IT'S A MUG'S GAME
TRYING TO GUESS THIS STUFF.
IF YOU TRY TO PLAN YOUR
FINANCIAL LIFE AROUND “WELL
I READ THIS IN THE HEADLINE,
AND THIS IS GOING TO
HAPPEN.”

Maureen says YOU WON'T WIN
THAT WAY.

Tony says YEAH, IF YOU
GO BACK TO MARCH WHEN THE
STOCK MARKET JUST STARTED
BREAKING, IT ALMOST --
NASDAQ AND THE TECH STOCKS
HAD BEEN GOING UP SO FAR AND
SO LONG, YOU WERE SEEING AN
END OF SCARY HEADLINES.
YOU SAW SCARY HEADLINES A
YEAR EARLIER, SAYING THE
MARKET'S TOO HIGH.
YOU DIDN'T REALLY SEE THEM
THAT MUCH AT THE BEGINNING
OF THIS SPRING AND THAT'S
WHEN IT HAPPENS.
IT ALWAYS COMES UP -- IF YOU
TRY TO READ THE DAY TO DAY
HEADLINES, YOU WILL GET SO
WHIP SAWED YOU WON'T KNOW
WHAT'S GOING ON.

Maureen says LET'S GO TO
LUCILLE IN MARKHAM.
HI LUCILLE?

The Caller says HI, HOW ARE YOU?

Maureen says GOOD, THANK YOU.

The Caller says MY QUESTION IS
ABOUT R.R.S.P.s.
THE BANK OFFER THEM, THE
TRUSTS OFFER THEM, THE
INVESTOR, LIKE MERYL LYNCH
OR EDWARD JONES, I COULD GO
ON, WHERE DO I START?
WHICH ONE IS THE BEST
SUITABLE, OF COURSE FOR ME?
WHERE DO I GET THE
INFORMATION?

Tony says THIS IS AN
R.E.S.P.?

The Caller says R.E.S.P. FOR MY
CHILDREN'S EDUCATION.
I DO HAVE THE MONEY TO
INVEST.
IT'S JUST SITTING IN A
SITTING ACCOUNT FOR SEVEN
YEARS, THE OTHER ONE NINE
YEARS, BUT I WANT TO INVEST
IT.
BUT WHERE DO I GO?!
IS ALL THE PLANS THE SAME
ACROSS FROM THE BANK TO THE
TRUST TO THE PRIVATE
INVESTMENT, OR DO THEY VARY?

Tony says WELL,
THERE'S A COUPLE THINGS
THEY'RE GOING TO VARY ON,
ONE IS THE FEES WHERE
THEY'RE GOING TO CHARGE YOU
AN ANNUAL FEE TO RUN IT.
HAVEN'T LOOKED LATELY, I'M
SURE THEY'VE STARTED
DROPPING THEM FROM 50 dollars TO 0
BECAUSE AGAIN THE
COMPETITION CAME OUT, THEY
WERE CHARGING PEOPLE ANNUAL
FEES SO YOU MIGHT WANT TO
JUST ASK YOU KNOW, IS THERE
AN ADMINISTRATIVE FEE OR
HANDLING FEE OR SET UP FEE.
THERE REALLY SHOULDN'T BE,
IT'S JUST LIKE AN R.R.S.P.
THERE AIN'T A LOT OF WORK
GOING ON AND THEY NEED
BUSINESS, FRANKLY.
SECOND OF ALL, YOU WANT TO
LOOK AT ESSENTIALLY WHAT
INVESTMENTS CAN YOU GET
INTO?
ARE YOU LIMITED?
CAN THEY -- ARE THEY GOING
TO TRY TO PUSH YOU INTO
THINGS YOU DON'T REALLY WANT
TO BUY?
ARE THERE GOING TO BE
COMMISSIONS?
BECAUSE WITH R.E.S.P.s
SPECIFICALLY WHAT YOU'RE
LOOKING AT IS A CAP ON HOW
MUCH YOU CAN PUT IN EACH
YEAR.
SO IF YOU'VE GOT 4,000 dollars TO
INVEST, GOING WITH A NO-LOAD
MUTUAL FUND, FOR EXAMPLE, IS
GOING TO MAKE A LOT OF
DIFFERENCE VERSUS GOING WITH
A LOW-LOAD MUTUAL FUND.
SO YOU WANT TO MAKE SURE YOU
HAVE THE FULLEST SORT OF
RANGE OF INVESTMENT OPTIONS
TO CHOOSE FROM TO MAKE SURE
YOU'RE GETTING GOOD QUALITY
STUFF.
YOU DON'T WANT TO GO AND BUY
AN R.E.S.P. FROM SOMEBODY
THAT JUST SAYS WELL YOU CAN
ONLY CHOOSE FROM THREE SIX
FUNDS BECAUSE THAT'S WE'RE
PUSHING BECAUSE WE MAKE BIG
COMMISSIONS ON THEM.

Maureen says BUT IF SHE'S GOT
THIS MONEY SITTING IN A
SAVINGS ACCOUNT AND SHE'S
NOT REGISTERED, SHE'S NOT
TAKING ADVANTAGE OF THE
MONEY SHE GETS FROM THE
FEDERAL GOVERNMENT NOW.
SO DO THAT SOON, RIGHT?

Tony says YEAH, YOU
WANT TO GET IT IN -- GET
SOME IN BEFORE THE END OF
THE YEAR, BUT BE VERY
CAREFUL.
IF YOU'VE GOT A BIG POOL OF
CASH SITTING THERE DON'T
MOVE IT ALL IN AT ONCE,
BECAUSE YOU CAN'T GO AND GET
THE R.E.S.P. AHEAD.
SO PUT IN 4,000 dollars PER KID
EACH YEAR AND START USE UP
YOUR ROOM THAT WAY.

Maureen says SO BASICALLY
WHAT FEE ARE THEY GOING TO
CHARGE IF ANY, AND TRY TO
GET IT DOWN TO NOTHING, AND
TWO, MAKE SURE THERE'S A
GOOD RANGE OF FUNDS THAT SHE
CAN INVEST IN.

Tony says YEAH.
YEAH, I WOULD CALL THEM UP
AND SAY “WHAT DOES IT COST
TO HAVE AN R.E.S.P. WITH YOU
SNOX CAN YOU SEND ME A
SAMPLE STATEMENT” SO YOU CAN
SEE IF IT MAKES ANY SENSE.
AND THEN SAY “WHAT
INVESTMENTS CAN YOU OFFER ME
IN THE R.R.S.P.?”
MAYBE YOU MIGHT TO WANT
ALMOST HAVE A LITTLE LIST
AHEAD OF TIME AND SAY CAN I,
FOR EXAMPLE, BUY A NO-LOAD
FUND FROM PHIL HAGGERS NORTH
WHICH NOBODY PUSHES BECAUSE
THEY DON'T PAY FEES TO THE
SELLERS AND THAT BUT THEY'RE
GOOD FUNDS.”

Maureen says GOOD LUCK.
THANKS VERY MUCH, LUCILLE.
LAURA IN TORONTO.
HELLO, LAURA.

The Caller says HI, HOW ARE YOU?

Maureen says HI.
I'M FINE, THANKS.

The Caller says OKAY.
I HAVE A QUESTION FOR THE
GENTLEMAN.
I'M 25 YEARS OLD, I'M
GRADUATING NEXT YEAR AND I
HAVE NO WORRIES ABOUT MY
FUTURE JOB SECURE.
I HAVE 5,000 dollars IN A LINE OF
CREDIT THAT'S SITTING THERE.
I GOT IT JUST IN CASE NEEDED
SOME HELP WITH SCHOOL.
I DON'T THINK I'LL BE
NEEDING THAT 5,000 dollars.
I'VE BEEN WONDERING FOR A
WHILE WHETHER I SHOULD
INVEST IT IN SOMETHING, AND
WHAT WOULD BE THE BEST
INVESTMENT, I GUESS.

Tony says YOU'VE GOT A
5,000 dollar LINE OF CREDIT YOU
HAVEN'T DRAWN ON YET?

The Caller says YES.

Tony says SO YOU COULD
GO AND BORROW IT?

The Caller says YES.

Tony says AND INVEST IT?

The Caller says YES.

Tony says OKAY.
PROBABLY NOT A GREAT IDEA.

The Caller says OKAY.

Tony says THE REASON
BEING -- WHAT YOU'RE LOOKING
AT IS YOU'RE SAYING I'M
GOING TO BORROW 5,000 dollars AND
I'M GOING TO PAY THE BANK
WHATEVER IT IS, 8 percent ON THAT
MONEY, ALL RIGHT?

Maureen says IS THAT WHAT IT
WOULD BE?
A LINE OF CREDIT?

Tony says I THINK
THEY'RE 8 percent OR 9 percent IF THEY'RE
SECURED, LET'S SAY 10 percent.
YOU'VE GOT TO MAKE MORE THAN
THAT ON YOUR INVESTMENT TO
MAKE SENSE, RIGHT?
SO LET'S SAY YOU'RE LUCKY
AND YOU MAKE 14 percent, YOU MAKE
14 percent, THEN YOU DEDUCT THE
COST OF YOUR LOAN, WHICH IS
10 percent, YOU MADE 4 percent AND THEN
YOU PAY TAX ON THAT AFTER
THE FACT SO YOU GET TO
DEDUCT THE COST BEFORE YOU
FIGURE OUT YOUR TAXABLE
BASIS.
BUT THEN YOU'RE DOWN TO 4 percent.
THEN THE GOVERNMENT TAKES 1 percent
OF THAT SO IN TAXES SO
YOU'RE DOWN TO 3 percent SO YOU'VE
DONE A LOT OF WORK TO GET A
REASONABLY MINIMAL RETURN.
YOU'RE ALSO TAKING A RISK.
BECAUSE LET'S SAY -- IN
ORDER TO GET THAT 14 percent -- AND
14 percent IS HISTORICALLY HIGH!
I MEAN ON AVERAGE YOU'RE
GOING TO LOOK AT 10 percent SO
YOU'RE ONLY GOING TO BE ABLE
TO BEAT THESE THINGS BY A
COUPLE PERCENT.
I MEAN, WHERE BORROWING TO
INVEST REALLY WORKS IS WHEN
YOU'VE GOT A BIG SUM AND
YOU'VE GOT A LONG TIMEFRAME
AND YOU'VE GOT A CUSHION.
SO THAT IF THEY CALL YOU UP
AND SAY “LOOK, YOUR
INVESTMENTS ARE NO LONGER
WORTH ENOUGH AND YOU NEED TO
KICK SOME MORE MONEY IN HERE,”
OR YOU HAVE TO BE ABLE TO
FEED THE INTEREST BILL
WITHOUT TOUCHING YOUR
INVESTMENTS, BECAUSE YOU
HAVE TO KEEP SELLING
INVESTMENTS IN ORDER TO PATE
INTEREST, LET'S SAY YOU
BORROW 100 dollars THOU AND YOU
INVEST IN THE STOCK MARKET,
THE MARKET FALSE, AND YOU
GOT TO SELL SOME WHEN THE
PRICES ARE DOWN IN ORDER TO
PAY YOUR INTEREST, YOU'RE
TRYING TO SWIM BACK
UPSTREAM.
SO YOU WANT TO BE ABLE TO
PATE INTEREST ON IT.
AND FRANKLY, YOU'RE YOUNG
ENOUGH THAT THAT EXTRA 3 percent IS
REALLY NOT GOING TO HELP
YOU.
BY THE TIME YOU START WORK,
START PUTTING SOME MONEY
SERIOUSLY AWAY IN YOUR
R.R.S.P. AND GET TAX
DEFERRED SAVINGS, THAT'S I
THINK A MUCH BETTER WAY TO
GO AND I WOULD NOT GET INTO
THE HABIT EVEN OFFERING THAT
LINE OF CREDIT.

Maureen says YEAH.
I'D RECOMMEND THAT, TOO.

Tony says YEAH, I MEAN,
YOU'RE SO MUCH BETTER OFF
NOT -- IF THE MAJOR THING
YOU DID IN YOUR LIFE ON THE
INVESTMENT FRONT WAS NOT
BORROW MONEY YOU DIDN'T
NEED.

Maureen says NOT HAVE DEBT.

Tony says YEAH.

Maureen says GOOD LUCK.
WE'RE TALKING TO TONY MARTIN
THIS AFTERNOON, A FINANCIAL
COLUMNIST FOR “THE GLOBE and
MAIL” AND CO-AUTHOR OF
“INVESTING FOR CANADIANS FOR
DUMMIES.”
IF YOU GIVE US A CALL WITH A
QUESTION THIS AFTERNOON,
WE'LL BE DRAWING FOR FOUR
BOOKS FROM THE NAMES THAT WE
GET AND THE CALLS THAT GET
TO AIR SO HERE ARE THE NUMBERS.

The numbers and email reappear briefly.

Maureen continues AND JAN IN PETERBOROUGH
SAYS “TONY, LOVE YOUR
PRESENTATIONS ON TVO AND I
HAVE ONE OF YOUR BOOKS.
MY QUESTION CONCERNS WHETHER
OR NOT TO USE PART OF A
SMALL NEST EGG TO PAY OFF A
CAR LOAN OR KEEP MAKING
PAYMENTS FOR THE NEXT TWO
YEARS AND INCREASE THE
SAVINGS.
PAYING OFF THE LOAN WOULD
TAKE A THIRD OF THE SAVINGS,
I'M PAGE 10 percent ON THE LONE.
THE PSYCHOLOGICAL BENEFIT OF
HAVING ABOUT FIVE MONTHS'
SALARY SAVED IS VERY GOOD,
ALTHOUGH HAVING THE CAR PAID
OFF WOULD BE FREEING AS
WELL.
WHAT WOULD YOU ADVISE?

Tony says GREAT QUESTION.
THAT'S AN E-MAIL SO WE'RE
GOING TO HAVE TO GO ON A
COUPLE OF ASSUMPTIONS.
WHEN YOU SAY NASDAQ WE'RE
GOING TO ASSUME IT'S NOT AN
R.R.S.P.
SO IT'S NOT PROTECTED.
AND I THINK -- IT'S FUNNY,
WHEN PEOPLE AND THESE
QUESTIONS IT'S HILARIOUS
BECAUSE I ALWAYS SAY TO
THEM, IF THIS PERSON WAS ON
THE CAMERA I'D SAY TO THEM
JUST SAY THE QUESTION AGAIN,
BECAUSE THEIR ANSWER IS IN
THE QUESTION.
DOESN'T SHE?
SHE SAYS “THE BENEFIT OF
PAYING OFF THE LONE” REALLY
WHAT COMES CLEAR TO ME IS
THEY'D LIKE TO BE DEBT-FREE.
AND INTERESTINGLY ENOUGH,
AFTER A SHORT PREVIOUS
QUESTION EARLIER ABOUT AN
EMERGENCY FUND, YOU KNOW,
YOU GOT FIVE MONTHS.
IF THAT'S A NEST EGG, THE
NEST EGG FOR SOME PEOPLE
IMPLIES SAVINGS, BUT IT
SOUNDS TO ME LIKE THAT'S A
SAFETY CUSHION, AND IF
THAT'S PSYCHOLOGICALLY
IMPORTANT, PROBABLY KEEP
GOING WITH THE CAR LOAN AND
CONTINUING THAT WAY.
ON THE OTHER HAND, IF
THEY'VE GOT PARENTS THAT
THEY CAN TAP INTO, IF THEIR
SITUATION LOOKS PRETTY
SECURE, IF THERE ARE OTHER
THINGS THAT THEY CAN GET
THEIR HANDS ON, OBVIOUSLY
THERE'S A HUGE BENEFIT FROM
PAYING OFF THE CAR LOAN, NOT
HAVING THE INTEREST PAYMENTS
AND THERE'S A REAL SAVINGS,
TOO.
BECAUSE THE 5,000 dollars, PROBABLY
MINIMAL INTEREST AND YOU'RE
GETTING TAXED ON THAT
WHEREAS IF YOU PAY OFF THE
CAR LOAN -- THE BEST EXAMPLE
IN THE WORLD, YOU PAY OFF A
10 percent LOAN, YOU'RE MAKING A
10 percent AFTER TAX RETURN ON YOUR
MONEY.
YOU CANNOT BEAT THAT,
GUARANTEED AND IT'S AFTER
TAX.
YOU'RE NOT GOING FIND A
GUARANTEED INVESTMENT
THAT'LL PAY OUT THAT AFTER
TAX SO IF THERE'S MONEY --
IF THE EMERGENCY FUND, IF
THAT NEST EGG IS FOR AN
EMERGENCY FUND AND THEY CAN
TAP IN ELSEWHERE, THEN I
WOULD SUGGEST PAYING OFF
SOME IF NOT ALL OF THE CAR
LOAN.
I MEAN, MAYBE THEY CAN WORK
WITH LIVING ON TWO AND A
HALF MONTHS OF THE EMERGENCY
FUND AND TAKE THE OTHER TWO
AND A HALF MONTHS OF LIVING
EXPENSES AND PUTTING THAT
DOWN AGAINST THE CAR.

Maureen says OKAY.
GOOD LUCK, JAN, THANKS FOR
THE E-MAIL.
TAMMY IS IN HAMILTON.
HI TAMMY?

The Caller says HI.

Maureen says HI.

The Caller says MY QUESTION IS
REGARDING INVESTING OUTSIDE
OF YOUR R.R.S.P.s?
NOW, I'VE MAXED-OUT MY
R.R.S.P.s, AND I HAVE NO
ROOM TO INVEST, AND I, I MAX
IT OUT EVERY YEAR, PUT THE
MAXIMUM AMOUNT IN, AND I
HAVE SOME EXTRA CASH TO
INVEST OUTSIDE.
WHAT'S BEST VEHICLE, DO YOU
THINK I SHOULD GO FOR?

Tony says LET ME AND
YOU A QUESTION, ARE YOU --
HAVE YOU GONE THROUGH ANY
SORT OF ASSET ALLOCATION, AS
IN HOW MUCH DO YOU WANT TO
HAVE IN BONDS VERSUS STOCKS
AND THAT SORT OF THING?

The Caller says OUTSIDE OF MY
R.R.S.P.s?

Tony says NO, OVERALL.

The Caller says OVERALL?
WELL BASICALLY -- I'M
BASICALLY ALL IN THE STOCK
MARKET.
MUTUALS, YES.

Tony says BECAUSE THIS
IS ONE OF MY FAVOURITE
POINTS.
PEOPLE ALWAYS SAY “WELL LOOK,
YOU HAVE YOUR FIXED INCOME
INVESTMENTS IN YOUR R.R.S.P.
AND YOUR STOCKS OUTSIDE
BECAUSE STOCKS ARE TAXED
LESS.”
AND I ALWAYS SAY THAT'S
REALLY CRAPPY ADVICE BECAUSE
MOST PEOPLE ARE MAXIMIZING
THEIR R.R.S.P., MUCH LESS
HAVING ROOM ELSEWHERE.
SO IF YOU'RE ALL IN STOCKS,
PUTTING IN YOUR R.R.S.P. AND
LOADING UP WITH STOCKS,
BECAUSE THAT'S WHERE THE
LONG-TERM GROWTH POTENTIAL
IS THE HIGHEST.
SO THIS WOMAN ALREADY HAS
THAT.
SHE'S TAKEN CARE OF THAT,
AND SO REALLY WHAT YOU'RE
LOOKING AT IS AGAIN AFTER
TAX RETURNS, RIGHT?

The Caller says EXACTLY.

Tony says AND YOU
DON'T NEED THE MONEY TO LIVE
OFF OF.

The Caller says NO.

Tony says SO IF YOU
INVEST IN A DIVIDEND FUND OR
A FUND THAT LOOKS AT A LOT
OF DIVIDEND STOCKS SO,
THINGS THAT PAY DIVIDENDS,
THAT'S THE LOWEST TAX RATE.
ACTUALLY IT'S ALMOST THE
SAME NOW -- I HAVEN'T SEEN
THE LATEST CALCULATIONS
BECAUSE THEY'VE CHANGED THE
CAPITAL GAINS TAX RATE AND
THEY'VE LOWERED IT, SO
WHETHER THAT'S WORTH IT TO
YOU OR WHETHER YOU WANT THE
HIGHER RETURN POSSIBILITY
WITH THE STOCKS IN ANY EVENT,
I WOULD JUST KEEP DOING WHAT
YOU'RE DOING.
LOOK AT STOCKS WITH A
CAPITAL GAINS RATE, THE TAX
IS LOW.
YOU'RE ALREADY MAXIMIZING
YOUR R.R.S.P.
I MEAN THE ONLY THING YOU
DON'T WANT TO DO IS INVEST
IN STOCKS WITHIN YOUR
R.R.S.P. AND BONDS, OR
RATHER INCOME-BEARING THINGS
OUTSIDE BECAUSE THEN YOU GET
HIT AT THE HIGHEST TAX RATE.

Maureen says BUT SHE'S DOING
ALL RIGHT.

Tony says YEAH, SHE'S
DOING ALL RIGHT.
THE ONLY THING IS IF YOU GOT
TO A POINT WHERE YOU WANTED
TO HAVE SOME BONDS IN THE
EQUATION, HAVE THE BONDS
INSIDE YOUR R.R.S.P. AND
HAVE THE STOCK, OR A
PROPORTION OF THE STOCKS
OUTSIDE.

Maureen says NEVER BEING IN
THE ENVIABLE POSITION THAT
TAMMY IS IN OF BEING ABLE TO
INVEST OUTSIDE MY R.R.S.P.,
I DON'T KNOW THE ANSWER TO
THIS QUESTION, THE BIG WORRY
IS THAT YOU'RE GOING TO BE
TAXED ON THE INTEREST THAT
YOU MAKE.
ARE YOU TAXED AT YOUR RATE
OF INCOME?
SO IF YOU'RE BEING TAXED AT
50 percent BECAUSE YOU MAKE A LOT
OF MONEY --

Tony says THAT'S WHERE
THE RATES COME FROM, YEAH.
SO IF YOU'RE IN THE TOP TAX
BRACKET -- IT'S EASIEST FOR
THE MATH.
LET'S SAY 40 percent, AND YOU MAKE
10 dollars IN INTEREST, YOU HAVE TO
HAND 4 dollars BACK.

Maureen says JUST WHILE WE'RE
TALKING TAXES WHAT DO YOU
THINK OF THE ALLIANCE
PARTY'S “FLAT TAX” PROPOSAL?

Tony says I HAVEN'T
CHASED IT DOWN BUT I DON'T
THINK THAT IT REALLY MAKES A
WHOLE BUNCH OF SENSE.
I'M PHILOSOPHICALLY OF THE
MIND THAT PEOPLE AT THE
LOWER END OF THE SCALE HAVE
SO LITTLE TO WORK WITH IN
SOME PARTS OF THE COUNTRY,
WE STILL HAVE CHILDREN WHO
AREN'T GETTING FED PROPERLY.
AND I JUST THINK TO THINK
THAT THOSE PEOPLE SHOULD
SAVE THE SAME PERCENTAGES AS
SOMEBODY THAT'S HIGHER UP,
THE PROBLEM IS THAT TO A
CERTAIN DEGREE, EVERYBODY'S
LIVING COSTS ARE SOMEWHAT
THE SAME.
SO LET'S SAY WE ALL NEED
30,000 dollars IF YOU'VE GOT A
FAMILY -- I'M NOT SURE WHAT
THE FIGURES ARE.
BUT LET'S SAY WE NEED
30,000 dollars A YEAR AFTER TAX TO
LIVE OFF OF, SOMEBODY WHO'S
GOT 2,000 dollars AFTER TAX ABOVE
THAT VERSUS SOMEBODY THAT'S
GOT 10,000 dollars, THAT'S A HUGE
DIFFERENCE PERCENTAGE WISE.
NOW THEY'RE ONLY MAKING 30 dollars
THOU VERSUS 32,000 dollars BUT
THERE'S A CERTAIN.
A MONEY IN OUR LIVES WHICH
WE HOLD ONTO FOR BRIEF
PERIODS.
YOU GET IT FROM THE EMPLOYER
AND THE MORTGAGE AND THE
GROCERY STORE AND THE KIDS'
SHOES AND SO FORTH.
SO IT'S THE EXTRA AMOUNT
THAT'S THE DIFFERENCE TO ME.
AND I CAN'T IMAGINE THAT
THERE'S A REASON WHY
SOMEBODY WHO'S GOT A HUGE
AMOUNT OF DISPOSABLE INCOME
SHOULDN'T PAY SLIGHTLY MORE.
BUT THAT'S, THAT'S JUST A
PHILOSOPHY.

Maureen says IT'S BOUND TO
BECOME A BIGGER DEBATE AS
PEOPLE UNDERSTAND WHAT
THEY'RE TALKING ABOUT, ONCE
WE GET INTO AN ELECTION.
IT'LL BE INTERESTING.
LET'S GO TO MARGARET IN
TORONTO.
HI MARGARET.

The Caller says HI.

Maureen says HI.

The Caller says MY QUESTION HAS
TO DO WITH CANADA PENSION
PLAN AND TAXES.
I LIVED OVERSEAS AND WORKED
THERE FOR THREE YEARS.
IN THAT THREE YEARS I DIDN'T
FILE CANADIAN INCOME TAXES.
I WAS TAXED IN THE
COUNTRY -- I WAS IN ENGLAND.
I UNDERSTAND WE HAVE A TAX
TREATY.
MY CONCERN NOW IS CANADA
PENSION PLAN.
I'VE COME BACK TO CANADA AND
I'M WONDERING, DO I NEED
TO -- CAN I PUT INTO IT?
DO I NEED TO?
IS THAT AN OPTION?
AND ALSO I'M LOOKING AGAIN
AT GOING BACK OVERSEAS, AND
I'M LOOKING AT TRYING TO GET
BACK, OR DO I STILL HAVE MY
NON-TAX STATUS.

Tony says LET'S DEAL
WITH THE C.P.P. THING FIRST.
HOW OLD ARE YOU?

The Caller says I'M 40.

Tony says SO YOU'VE
GOT LOTS OF YEARS LEFT ON
THE C.P.P. THING.
YOU DON'T REALLY HAVE A
CHOICE IF YOU'RE WORKING
HERE AND CANADIAN YOU'RE
PAGE INTO THE C.P.P.
SO YOU CAN'T PLAY IT.
I MEAN IF YOU'VE GOT A JOB
AND THERE'S A PAYCHEQUE,
YOU'RE GOING SEE A LITTLE
BOX THAT SAYS C.P.P. AND
PREMIUMS ARE COMING OFF.
IF YOURSELF-EMPLOYED YOU'RE
PAGE THE WHOLE SHOT, IF
YOU'RE WORKING FOR AN
EMPLOYER, YOU PAY THE WHOLE
SHOT, THE EMPLOYER PACE THE
HALF THE SHOT.
THAT'S THE LAW OF THE LAND.
AND THERE ARE DIFFERENT
RULES NOW IN TERMS OF HOW
LONG YOU'RE OFF-SHORE AND
HOW LONG BACK HERE.
BUT IF YOU'RE 40 AND HERE
FOR A GOOD NUMBER OF YEARS
BEFORE YOU RETIRE, YOU WILL
BE QUALIFYING TO GET THE
C.P.P..

Maureen says NOW SHE'S
TALKING ABOUT GOING BACK.
HOW LONG ARE YOU THINKING,
MARGARET?

The Caller says I DON'T KNOW.
I CAN GO FOR A YEAR, TWO
YEARS, OPTIONS, AND I HAVE
ALSO AN OPTION OF GOING TO
DIFFERENT COUNTRIES.

Maureen says BUT YOU DON'T
EXPECT TO STAY FOR 20 YEARS
ANYWHERE ELSE OR ANYTHING?

The Caller says IT'S A
POSSIBILITY.
I MEAN IT'S VERY ATTRACTIVE
TO GO OVER AND HAVE THE
NON-TAX STATUS.
IF I CAN SET UP -- I DON'T
KNOW, PERHAPS EVEN OFF-SHORE
ACCOUNTS, I DON'T KNOW IT
THAT'S POSSIBLE, AND SOCK MY
MONEY AWAY, AS THEY SAY,
IT'S A POSSIBLE.

Tony says YEAH.
WELL I THINK YOU JUST GOT
TO -- I WOULD NOT TRY TO RUN
YOUR LIFE BY ELIGIBILITY OR
NON-ELIGIBILITY TO C.P.P.
IF YOU'RE HERE YOU'RE GOING
PAY UP TO A CERTAIN AMOUNT
AND THAT'S GOING TO BE
DEDUCTED AND HOW MUCH YOU
GET OUT OF IT WILL BE CAL
CHAIT ON HOW MANY YEARS
YOU'VE BEEN IN AND SO FORTH.
BUT YOU'RE PRETTY YOUNG.
I MEAN, IF YOU GO AWAY AND
YOU'RE OFF-SHORE FOR 20
YEARS AND YOU'RE NOT PAYING
ANY TAX IN IT YOUR C.P.P. IS
GOING TO LOOK LIKE POCKET
CHANGE ANYWAY, SO...

Maureen says YEAH.
OKAY, GOOD LUCK IN YOUR
DECISION.
I HAVE AN E-MAIL HERE FROM KYLE.
“I'VE BEEN THINKING OF
OPENING AN INTERNET SAVINGS
ACCOUNT WITH ONE OF THE BANK,
ING DIRECT P.C. FINANCIAL
OFFERING WHAT SEEMS TO BE
TOO GOOD TO BE TRUE INTEREST
RATES FOR UP TO 5 percent IS THIS
FOR REAL AND HOW IS IT
DIFFERENT FROM PURCHASING A
SHORT TERM G.I.C. WHICH
GENERALLY NETS LESS THAN THE
5 percent OFFERED?”

Tony says GREAT
QUESTION, AND I DON'T KNOW,
BUT PRESIDENT'S CHOICE
PROBABLY SHOULD CALL
THEIR -- YOU KNOW, I HAVE
THE TOO GOOD TO BE TRUE SOUPS.

Maureen says YEAH, INCREDIBLE
EDIBLE MORTGAGES.

Tony says YEAH, THERE WE GO.
THEY ARE A VERY STRANGE
DEAL, AND THEY DO APPEAR TOO
GOOD TO BE TRUE.
WHAT THESE GUYS ARE UP TO IS
A COUPLE THINGS.
ONE, WHY THEY CAN OFFER SUCH
A GOOD RETURN IS THAT THEY
REALLY ARE -- THERE'S NO
BRICKS AND MORTGAGE TARS.
THERE'S NO TELL LARRS,
BILLINGS, HEATING COSTS, NO
NIGHT SECURITY GUYS,
SOMEBODY THAT'S GOT TO COME
IN AND CLEAN THE PLACE.
IT'S ALL DONE ELECTRONICALLY.
NOW I SORT OF PURSUED IT
BECAUSE I WROTE A COLUMN
ABOUT THESE THINGS A WHILE
BACK AND I THOUGHT WELL
THAT'S ALL GREAT, BUT STILL,
IT STILL LOOKS TOO GOOD TO
BE TRUE AND IT IS TO A
CERTAIN DEGREE BECAUSE
BECAUSE OF COURSE THEY WILL
TRY TO UP-SELL YOU.
IF YOU NOW LOOK AT
PRESIDENT'S CHOICE, FOR
EXAMPLE, THEY'RE OFFERING
MORTGAGES, THEY'VE GOT A
COUPLE MUTUAL FUNDS, ALSO A
CHEQUING ACCOUNT THAT
DOESN'T PAY AS MUCH INTEREST
AND SO FORTH.
SO THEY'RE GOING TO GET
THEIR POUND OF FLESH SOON
ARE OTHER LATER, AND THAT'S
JUST THE WAY THE WORLD
OPERATES.
BUT AGAIN, AS THE SMART
CONSUMER, YOUR JOB IS TO GO
OUT AND FINE THE THINGS THAT
WORK FOR YOU AND IGNORE THE
THINGS THAT DON'T WORK FOR
YOU.
SO THEY REALLY DO MAKE A LOT
OF SENSE.
THEY PAY, AS THIS GENTLEMEN
SAYS, I THINK THEY WERE AT
5.25, 5.5 THESE DAYS.
IT WILL BE TAXED, AS WE
TALKED ABOUT EARLIER, AT
YOUR FULL MARGINAL TAX RATE,
BUT IN TERMS OF A GOOD PLACE
TO PARK MONEY, IT'S GREAT.
AND WHY DOES IT BEAT A
G.I.C.?
IT BEATS A G.I.C. BECAUSE
THERE'S NO CONTROLS OVER IT.
YOU CAN GET THE MONEY OUT
WHEN YOU WANT.
G.I.C., IF YOU WANT TO
CASH-OUT EARLY, UNLESS
YOU'VE GOT SOME WITH SPECIAL
CLAUSES THAT AS A RESULT
WON'T PAY AS MUCH, YOU CAN'T
CASH IT IN.

Maureen says HOW DOES THE
MONEY IN GO THERE IF THEY
DON'T HAVE BANKS?
HOW DO YOU DEPOSIT MONEY?

Tony says YOU
TYPICALLY -- I MEAN THE
CHANGE, AND WITH ALL THESE
THING, IT'S A BIT HEADACHY
IN TERMS OF THE FORMS BUT
TYPICALLY WHAT YOU WOULD DO
IS SEND THEM A FORM, A VOID
CHEQUE FROM YOUR ACCOUNT OR
SEND THEM A CHEQUE, BIG BANG
OF CANADA, INTO THE ACCOUNT,
AND THEN THEY GET THE
ACCOUNT NUMBER, AND THEN
AFTER THAT I BELIEVE YOU CAN
JUST GO ONLINE ON THE
INTERNET OR OVER THE PHONE
AND SAY TRANSFER SOME MONEY
OR WRITE THEM A LETTER OR
MALE THEM ANOTHER CHEQUE.
OR EVEN I THINK YOU CAN
PROBABLY FIX IT UP SO YOU
CAN REGULARLY HAVE 100 dollars OR
200 dollars.
LET'S SAY YOU'RE USING THAT
AS AN EMERGENCY ACCOUNT,
TRYING TO BUILD UP AN MERNG
SEE ACCOUNT SLOWLY, EVERY
MONTH, YOU CAN SAY, I WANT
100 dollars MOVED FROM YOU GUYS
OVER HERE OR WHAMPLT.

Maureen says GOOD LUCK.
SHEILA IN TILLSENBERG.
HI SHEILA.

The Caller says HI.
I'M WONDERING IF YOU CAN
HELP ME.
I NEED SOME MONEY, ABOUT
5,000 dollars.
I HAVE MONEY IN R.R.S.P.s, I
HAVE MONEY IN STOCKS, AND I
HAVE MONEY IN MUTUAL FUNDS.
NOW, I JUST WANTED TO KNOW
WHICH ONE I COULD GET MONEY
OUT OF WITHOUT, YOU KNOW,
CAUSING A CAPITAL GAIN.

Tony says THE
STOCKS -- WHEN YOU SAY
STOCKS AND MUTUAL FUNDS,
THOSE ARE STOCKS AND MUTUAL
FUNDS OUTSIDE YOUR R.R.S.P.?

The Caller says YES, THEY BOTH ARE OUTSIDE.

Tony says OKAY.
WHATEVER YOU SELL, WHATEVER
YOU SELL IN THIS COUNTRY,
AND MAKE A PROFIT ON, YOU'RE
GOING GET TAXED ON.
THAT'S THE GROUND RULES.
NOW, WHAT MIGHT BE IN YOUR
FAVOUR IS IF IN THE PAST
YOU'VE SOLD SOME STOCKS OR
TAKEN A LOSS IN SOMETHING,
AND YOU HAVEN'T CLAIMED THAT,
YOU MIGHT BE ABLE TO OFF-SET
IT.
FOR EXAMPLE, LET'S SAY YOU
PUT 10,000 dollars INTO SOME STOCK
THAT WENT INTO THE TOILET
AND YOU LOST 5,000 dollars, YOU'VE
HAD A CAPITAL LOSS OF
5,000 dollars.
SO IF YOU NOW SELL STOCK
THAT YOU BOUGHT, GOT GIVEN
FOR FREE, AND IT WENT UP TO
5,000 dollars, THEY OFF-SET EACH OTHER.
SO YOU HAVE A 5,000 dollar LOSS,
5,000 dollar GAIN, THERE'S NO TAX
TO BE PAID SO THAT'S WHAT I
WOULD DO IS GO BACK, FIRST
OF ALL LOOK AND SEE IF
YOU'VE GOT ANY LOSSES THAT
CAN BE OFF-SET AGAINST THE
GAINS.

Maureen says AND YOU JUST GO
BACK TO YOUR FINANCIAL --
WHO EVER IS HANDLING THESE
THINGS --

Tony says YEAH, YOU
GOT TO GET YOUR FORMS OUT
AND IF YOU HAVEN'T FILED --
TYPICALLY WHAT YOU SHOULD DO,
AND IT'S PRETTY HARD TO DO
IS EVERY YEAR WHEN YOU FILE
A TAX RETURN GO, THROUGH ALL
THESE THINGS AND IT'S
GETTING COMPLICATED NOW WITH
PEOPLE TRADING A LOT BUT
BASICALLY IF YOU'VE JUST
SOLD SOME STOCKS AND MADE A
LOCK, JUST MAKE A RECORD OF
IT SO IT'S CARRIED FORWARD.
BUT IF YOU HAVE ALL THE
SUPPORTING DOCUMENTATION, IT
SHOULDN'T BE A PROBLEM.

Maureen says OTHER THAN THAT
IT'S HARD TO AVO PAGE TAX
IN THIS COUNTRY.
THERE ARE INVESTMENTS THOUGH
THAT ARE TAX DEDUCTIBLE,
RIGHT?
LIKE IF YOU INVEST IN
CERTAIN -- I DON'T KNOW,
USED TO BE MOVIES OR MOVIE
COMPANIES OR THINGS LIKE THAT.

Tony says YEAH, THOSE
ARE REAL TAX SHELTERS AND
YOU HAVE TO BE REALLY
CAREFUL YOU KNOW WHAT YOU'RE
DOING.
THEY'RE LONGER TERM AND
THEY'RE A LOT LESS LIQUID IN
TERMS OF IF YOU WANT TO GET
YOUR MONEY OUT, FOR EXAMPLE
LIMITED PARTNERSHIP, YOU MAY
NOT BE ABLE TO GET TO IT.

Maureen says RISKIER THEN, TOO.

Tony says YEAH, THERE
ARE SOME OIL AND REAL ESTATE
TRUSTS WHERE MONEY WAS
SUPPOSED TO FLOW THROUGH AND
ALL OF A SUDDEN WE'RE NOT
MAKING AS MUCH MONEY AS WE
THOUGHT SO WE'RE NOT GOING
TO PAY IT OUT.

Maureen says YEAH.
SPEAKING OF OIL, WITH THE
OIL PRICES WHERE THEY ARE,
IS THAT A GOOD PLACE TO PUT
YOUR MONEY?

Tony says I'VE SEEN
MORE AND MORE HEADLINES SAY
LOOK, SOIL NOWHERE NEAR AS
HIGH AS IT'S GOING GO SO IT
MIGHT MAKE SENSE TO HAVE
SOME OF YOUR NUN A
RESOURCE-BASED MUTUAL FUND,
AND I THINK THERE'S PROBABLY
SOME SENSE TO THAT.
AT THE VERY LEAST, PROBABLY
BECAUSE THESE DAYS PEOPLE
ARE LIKELY WAY OVER-WEIGHTED
IN TECH STUFF.
EVEN IF YOU JUST BUY AN
INDEXED MUTUAL FUND THAT
TRADES ON THE TORONTO STOCK
EXCHANGE, A QUARTER TO A
THIRD OF YOUR MONEY IS TIED
UP IN NORTEL.

Maureen says AND THAT'S NOT DOING --

Tony says IT'S NOT
DOING SO GREAT BUT IT'S ALSO
NOT TO GREAT TO BE TIED UP
IN SOMETHING SO HEAVILY.
SO YOU KNOW, THERE ARE A
COUPLE CHEAP RESOURCE FUNDS
OUT THERE.
RESOURCE FUNDS ARE ALSO SORT
OF “VALUE PRICED.”
IN OTHER WORDS NOBODY'S
REALLY BUYING THEM SO
THEY'RE NOT WORTH VERY MUCH
SO THAT'S A NICE DEFENSIVE
PLAY AS WELL.

Maureen says ALL RIGHT, KURT
HAMILTON, YOU'RE NEXT.
HELLO.

The Caller says HELLO.
I SURE LIKE YOUR SHOW.

Maureen says THANK YOU.

The Caller says CAN I TALK TO
Mr. MARTIN, PLEASE?

Maureen says OKAY, GO AHEAD.

The Caller says MY QUESTION, MY
QUESTION IS IF I'M A SENIOR,
IF I GIVE SOME MONEY TO MY
SON TO BUY A HOUSE, AND HE
PAYS ME BACK IN DIVIDENDS
INSTEAD OF A LOAN, DO I HAVE
TO PAY TAXES ON IT?

Tony says HOW OLD IS
YOUR SON?

The Caller says 28.

Tony says SO HE'S AN ADULT?

The Caller says YEAH.

Tony says YOU CAN JUST
GIVE HIM THE MONEY.

Maureen says MAYBE CURT WANTS
THE MONEY BACK.
DO YOU WANT THE MONEY BACK?

The Caller says NO, HE WANTS TO
PAY IT BACK BECAUSE HE'S GOT
A GOOD POSITION.

Tony says THE RULES
GET FUNNY AROUND THIS.
IF YOU'VE GIVEN YOUR SON
MONEY AND IT'S NOT A
STRAIGHT OUT-AND-OUT GIFT,
AND THERE'S AN UNDERSTANDING
AND SOME PAPER THAT IT'S
GOING TO BE REPAID, YOU'VE
LOANED HIM THE MONEY AND
YOU'VE GOT -- YOU'RE MAKE
MONEY OFF THIS, SO YOU'VE
GOT TO DECLARE THAT.
ON THE OTHER HAND, IF YOU
GAVE HIM THE MONEY AND HE
BUYS THE HOUSE AND HE WANTED
TO GIVE IT BACK AT A FUTURE
TIME, THEN MY UNDERSTANDING
IS IT'S NOT TAXABLE.
SO YOU REALLY, YOU REALLY
HAVE TO -- IT'S REALLY THE
TAXABLE OR NON-TAXABLE
NATURE OF IT IS DRIVEN BY
WHETHER IT'S A GIFT OR A
LOAN.

Maureen says SO IF THEY
CALLED IT A GIFT FOR NOW --
REVENUE CANADA WILL KNOW
THIS BECAUSE THEY'LL SEE
CURT TAKING A BUNCH OF MONEY
OUT OF SOMEWHERE.

Tony says OH, YEAH,
AND THESE DAYS, ESPECIALLY
WITH COMPUTERS, MAN, NOTHING
GETS HIDDEN.
SO IF THEY WANTED TO START
LOOKING THEY COULD SAY LOOK,
THIS MAN GAVE 100,000 dollars TO HIS KID.
BUT THAT'S ALLOWED.
YOU CAN GIFT AWAY MONEY LIKE
MAD.
YOU CAN GIFT IT ALL AWAY.
IN FACT I WAS JUST WRITING
ABOUT THIS DOING ANOTHER
VERSION OF FINANCES FOR
DUMMIES AND WAS SAYING ONE
OF THE BEST WAYS TO DO
ESTATE PLANNING IS GIVE IT AWAY.

Maureen says YEAH.
MOM AND DAD, ARE YOU
LISTENING?
YOU CAN GIVE IT AWAY LIKE CRAZY.

Tony says YOU CAN GIVE
IT AWAY AND THEN HAVE YOUR
SON RETURN IT.
BUT IF HE'S RETURNING IT ON
A SORT OF A LOAN BASIS AND
PAGE INTEREST THEN YEAH, YOU
MIGHT AS WELL HAVE TALENT TO
THE A BANK OF MONTREAL'S
BOND FUND, AND YOU SHOULD BE
DECLARING THAT INTEREST.

Maureen says OKAY, THANK YOU,
KURT, FOR THE QUESTION.
RANDY ASKS “TONY, DO YOU
RECOMMEND BORROWING ON THE
HOME EQUITY TO INVEST IN
SECURITIES?
I CURRENTLY DO NOT HAVE A
MORTGAGE AND I'M INTERESTED
IN INVESTING DURING THESE
DEPRESSED MARKETS.
WHAT ARE THE TAX
IMPLICATIONS?”

Tony says WELL WE
TALKED A LITTLE BIT ABOUT IT
EARLIER, LET'S LEAVE THE TAX
IMPLICATIONS ASIDE FOR A
SEC.
ONE OF THE THINGS THAT HE
MAKES A REALLY GOOD POINT
ABOUT IS IT'S PROBABLY A
BETTER TIME NOW THAN IT WAS
SIX MONTHS AGO.
AND INTERESTINGLY ENOUGH,
WHAT HAPPENS IS PEOPLE START
TO THINK ABOUT BORROWING
AGAINST THEIR HOME EQUITY
LOAN RIGHT WHEN MARKETS ARE
AT THE TOP BECAUSE THEY SEE
ALL THESE PROFITS AND THINK
I'M I GOTTA GETS A PIECE OF
THIS THEY BORROW AGAINST
THEIR HOME, INVEST IN THE
MARKET, STOCK MARKET
DROPS --

Maureen says BOOM.
BUT RANDY KNOWS --

Tony says YEAH, SO
RANDY'S DOING ONE THING
RIGHT.
FIRST OF ALL HE'S GOT HIS
HOME PAID OFF.
THAT'S A GREAT THING.
SECOND OF ALL HE'S SAYING I
SHOULD BUY WHEN PRICES ARE
DOWN.
THAT'S A GOOD THING.
TO THE TAX IMPLICATION, IT'S
ESSENTIALLY YOU'RE BORROWING
MONEY IN ORDER TO EARN MONEY
SO THINK OF IT ALMOST LIKE A
BUSINESS.
IF YOU HAVE TO RUN A
BUSINESS AND YOU HAVE TO
GO -- YOUR WHATEVER, LOBLAWS,
AND YOU'VE GOT TO GO BORROW
MONEY AND PAY PEOPLE 5 percent IN
ORDER ORDER TO BUILD A NEW
STORE AND THE STORE BRINGS
YOU 10 percent, YOUR NET GAIN ON
THE WHOLE TRANSACTION IS
ONLY 5 percent, BECAUSE THE
INTEREST COSTS, JUST THE
COST OF DOING BUSINESS, IT'S
JUST LIKE YOU HAD TO GO OUT
AND BUY A BOX OF PENCILS,
SAME THING.
YOU BOUGHT SOME PENCILS, YOU
BOUGHT A COMPUTER, AND YOU
BOUGHT SOME MONEY, REALLY.
YOU RENTED SOME MONEY.
THAT'S THE WAY TO THINK OF
IT.
SO IF YOU GO OUT AND TAKE A
HOME EQUITY LOAN AND I DON'T
KNOW WHAT THEY'D BE CHARGING
YOU THESE DAYS, 8 percent, AND YOU
MAKE 10 percent ON YOUR INVESTMENTS,
YOU'VE ACTUALLY NETTED OR
REALLY COME OUT WITH JUST A
2 percent GAIN.
SO YOU SAY TO THE GOVERNMENT,
WELL, I MADE 10 percent, BUT IT
COST ME 8 percent, SO I REALLY HAVE
TAXABLE CAPITAL GAINS OF 2 percent
SO I'LL PAY YOU WHATEVER IT
IS ON THE 2 percent.
SO JUST REMEMBER, THOUGH,
IT'S A REAL -- IT'S A
LONG-TERM THING, BECAUSE YOU
CANNOT PREDICT WHAT THE
MARKETS ARE GOING TO DO THE
NEXT YEAR, TWO, THREE.

Maureen says HOW LONG?

Tony says I MEAN, I'VE
HEARD PEOPLE SAY YOU CAN GO
FOR FIVE, BUT REAL COMFORT
ZONE?
SEVEN TO TEN.

Maureen says OKAY.
ALL RIGHT, JUST FINALLY AS A
WAY OF WRAPPING UP, A LOT OF
THE PEOPLE WHO HAVE CALLED
IN TODAY, NO ONE'S SORT OF
MENTIONED A FINANCIAL
PLANNER OR SOMEBODY THAT'S
HELPING THEM SORT OF SELECT
STOCKS.
IS THAT IMPORTANT?

Tony says IT'S GROWING
LESS -- IT'S GROWING LESS SO,
AND AS SOON AS I SAID THAT I
WAS GOING SAY AND IT'S
GROWING MORESO.
AND THE PROBLEM IS THAT
PEOPLE ARE USING THEM SO
MUCH BECAUSE OF THE INTERNET
ON-LINE BROKERS AND DISCOUNT
BROKERS.
BUT SOME PEOPLE MIGHT FIND A
USE FOR A BROKER FOR THAT
VERY PRECISE REASON, AS
THERE'S A REAL INFORMATION
OVERLOAD.
AND THERE'S A TENDENCY TO
FOCUS ON TODAY'S EVENTS IN
THE HEADLINES IN THE NEXT
2.3 MINUTES AND SO FORTH.
AND ONE OF THE GREAT, ONE OF
THE GREAT ADVANTAGES OF
HAVING A GOOD BROKER IS THAT
THEY CAN ACT AS A SOBER
SECOND THOUGHT.
SO YOU CALL UP AND SAID
“RIGHT.
PUT IT ALL INTO NORTEL
BECAUSE I READ IT'S GOING TO
GO UP TOMORROW” AND THE GUY
WILL SAY YOU SILLY IDIOT,
GET OFF THE PHONE AND STOP
WASTING MY TIME!
AND THAT WILL BE MORE THAN
WORTH THEIR WEIGHT IN GOLD
SO THAT'S NOT A BAD THING TO
HAVE.
SOME PEOPLE REALLY NEED THEM
TO HAVE THEM REIGNED IN SOME
BROKERS ARE VERY INFORMATIVE
AND MOVE YOU AHEAD AND HELP
YOU OUT WITH THE
INFORMATION.
IT REALLY DEPENDS ON THE
TIME AND THE ENERGY AND
INTEREST YOU HAVE IN THIS
STUFF.
YOU CAN DO IT ON YOUR OWN,
YOU CAN GO AND BUY -- DUMP
ALL YOUR MONEY INTO A COUPLE
INDEX FUNDS WITH LOW, NO-LOAD,
LOW EXPENSE RAVEN JOS YEAR
TO YEAR AND LEAVE IT ALONE
AND NEVER TALK TO ANYBODY
ABOUT ANYTHING AND JUST GET
THE AVERAGES.

Maureen says IF YOU'RE
COMFORTABLE WITH THAT, FINE.
OKAY, WE'RE GOING TO HAVE TO
LEAVE IT THERE TONY, HOPE
YOU COME BACK AGAIN.

Tony says OKAY.

Maureen says TONY MARTIN,
TONY A FINANCIAL COLUMNIST
FOR “THE GLOBE and MAIL.”
NEWSPAPER AND Co-author OF
“INVESTING FOR CANADIANS FOR
DUMMIES.”
IT'S PUBLISHED BY C.D.G.
BOOKS CANADA.
FOR MORE ON INVESTING, TONY
RECOMMENDS “THE GLOBE and MAIL.”
WEBSITE.

A slate reads “Globe and Mail. Globeinvestor.com”

Maureen continues That’s all the time we have for this edition of More to Life.
Thank you for watching. I’m Maureen Taylor.

Watch: Finance