DAVE'S - PERSONAL FINANCIAL TIPS

E-mail DAVE at:  dpg@oath.com   or dphilips@ican.net


Personal Finance Tips is a service provided by your
financial adviser, a member of the Association des
intermediaires en assurance de personnes du Quebec, AIAPQ.


# 1 - 	Have you heard of the Four Pillars?

	The Canadian financial system is made up of four pillars: insurance companies,
banks, trust companies and securities dealers. Despite deregulation, these four pillars still
exist and each group legally has the exclusive right to offer certain services. However, in
the past few years, the largest securities dealers and a number of the largest trust
companies were taken over by banks. Yet, insurance companies remained independent
and they continue to offer a broadening variety of financial services available in the
comfort of your home.


# 2 - 	Do you know anything about the stock market?

	When you buy shares, you become a co-owner of the company which issued
them. Shares can provide a much higher return on investment than is provided by other
financial products, but they also carry a high level of risk, which is also related to the risk
the issuer is facing while carrying on business. Various types of shares are available,
from common shares to preferred shares. The latter offer a more modest and more
reliable return on investment, as well as a better guarantee that you will eventually get
your money back.


# 3 - 	Did you know that when you own common shares you are co-owner of a
company?

	As co-owner, you have a chance of obtaining high returns on your investment,
when the company is doing well. The shares of companies having a proven track record
of stability and profitability for years and providing stable profits to their shareholders are
called Blue Chips, from the most valuable gaming tokens, the blue ones.


# 4 - 	Did you know that preferred shares offer stable return and better
protection?

	Of course, a stock market investment is more risky than buying government
bonds or Guaranteed Investment Certificates, but preferred shares carry a lower risk level
than common shares, because they guarantee the payment of a set amount of dividends.
Financial Tips Express is a service provided by your financial adviser, a member of the
Association des intermediaires en assurance de personnes du Quebec.


# 5 - 	Have you heard of mutual funds?

	They are pools of investors' funds created by large Canadian, Quebec or foreign
financial institutions. The funds are invested in various financial markets and can
therefore produce high returns. The Canadian funds, balanced equity funds and foreign
stocks funds make it possible for you to buy indirectly a mix of shares having various
degrees of risk and hence achieve better safety through diversification of risk. They also
often provide significant returns.


# 6 - 	Did you know that with certain mutual funds you can invest in
	a complete range of  financial products?

	These so-called balanced funds invest in bonds, Guaranteed Investment
Certificates, common and preferred shares, and sometimes in mortgages. They are
managed by professionals who watch the portfolio on a daily basis and make changes to
it according to the opportunities they see in financial markets. This gives you a stable
return and participation in professional investment management.


# 7 - 	Did you know that creditor-proof RRSPs still exist?

	An RRSP sold through a life insurance company is non-seizable when you start it
for the purpose of planning your own retirement and you name as beneficiary upon your
death, your legal spouse, your ascendents or descendents (father, mother, or children,
grandchildren) or a third party as irrevocable beneficiary. Only the amounts deposited
into the RRSP while your assets are not being seized become non-seizable.


# 8 - 	Did you know that mutual funds should never be bought as short-term
investments?

	Mutual funds are long-term investments. Besides the fact that certain mutual
funds charge administration and purchase fees (front-load), the value of mutual funds
shares fluctuates with the economy. However, over a period of 5 to 10 years, they almost
always provide attractive returns. Check carefully the track record before buying.


# 9 - 	Did you know that the best way of insuring your mortgage is usually to
	purchase regular life insurance or a personal mortgage insurance contract?

	Unlike the insurance sold by lending institutions, in the event of your death,
personal mortgage insurance provides for benefits payment to the policy's beneficiaries,
not to the financial institution. Then the beneficiaries may decide not to repay the
mortgage, if the terms are favourable, but rather to invest the money more profitably and
use the income to meet the mortgage payments.



# 10 - 	Did you know that when you buy insurance from a mutual
	insurance company, you become co-owner of that company?

	This is the principle of mutual insurance companies as developed in the 19th
century. These companies resemble cooperatives. When buying your insurance, you
obtain the right to participate in the decisions made by the company. In recent years,
however, a number of mutual insurance companies have formed subsidiaries offering
competitive insurance products... but without participation.



# 11 -	Did you know your insurance contracts have a
	guarantee similar to that of your bank deposits?

	In case an insurance company were to experience difficulties, the (societe
d'indemnisation pour les assurances de personnes) guarantees the payment of death
benefits of up to $200,000, cash withdrawals of $60,000 on life insurance policies, $2,000
a month on annuities and disability insurance benefits of up to $2,000 a month per
insured under a contract. Financial Tips Express is a service provided by your financial
adviser, a member of the Association des intermediaires en assurance de personnes du
Quebec.


# 12 - 	Is a second home a good investment?

	A second home will prove to be a good investment provided it has a quality
location away from urban or industrial development. Larger lots fronting lakes will provide
the best values. If you have a nose for discovering attractive spots (not too far from the
city) before everybody else starts speculating in the area you may eventually end up with
a good profit. But refrain from over-improving your property. The market for country
manoirs is thin, especially in times of recession.


# 13 - 	Are you familiar with GICs?

	GICs are Guaranteed Investment Certificates, which may be purchased from
financial institutions such as banks, trust companies, etc. Insurance companies offer
equivalents to GIC in the form of Deferred Annuities. The issuing institution guarantees a
fixed interest rate over a set period of time. This type of investment provides an attractive
return and a high level of safety. However, make sure you deal with a financial institution
which will keep you informed of the maturity dates of your investments and will not renew
them without notifying you because, once your money is reinvested, you cannot withdraw
it prior to the maturity date, except in the event of your death.


# 14 - 	Did you know that Guaranteed Investment Certificates
	are more attractive when interest rates are high?

	A few years ago, these certificates were especially attractive as they provided
rates of return in excess of 10%. Today, GIC interest rates vary between 5% and 8%. It
may be to your advantage to diversify your investments with the help of your personal
adviser.
Personal Finance Tips is a service provided by your financial adviser, a member of the
Association des intermediaires en assurance de personnes du Quebec.


# 15 - 	Is renovating your home a good investment?

	Yes, it is, when you add to your home new features which will be attractive to
prospective buyers. Investments in costly construction materials, in-ground pools,
solariums and spas will be lost unless your home is located in an area or an environment
highly desirable to luxury minded home buyers. Keep in mind your and your family's
comfort and well-being and remember that the best home improvement investment
enhances your home's looks and longevity.


# 16 - 	Are you familiar with Term Deposits?

	When you own a duplex where you use half the habitable space, you receive
steady income in the form of rent from your tenant and you can deduct from your
income taxes the portion of your mortgage interest costs related to the rented premises,
as well as all the related expenses. You can therefore acquire an investment asset and
defer taxes to the time you sell it. If you sell or otherwise dispose of the property at a time
when your income is lower, such as when you retire, you will not owe any taxes on the
portion of the building you lived in and the capital gains tax will be reduced.


# 17 - 	Did you know that nowadays life insurance can meet your
	exact needs and financial situation?

	Over the recent years, life insurance has become a very competitive and flexible
financial product. It is now possible to purchase variable premium and variable rate
insurance policies where you pay every year the amount of premium which covers your
actual needs, according to your capacity to pay, while obtaining a stable, long-term
protection. In the event you become disabled or if you experience financial difficulties,
you can defer payments or even receive an automatic refund of your premiums!


# 18 - 	Did you know that shortening the number of years of your
	mortgage payments will save you thousands of dollars?

	On a 25-year, $80,000 mortgage, you will pay $125,000 in interest (at 10%). But
at the same interest rate, over a 15-year period your interest cost would shrink to only
$70,000. To shorten your mortgage by 10 years will cost you only $85 more per month.
That's a small effort for a big reward!


# 19 - 	Did you consider making weekly mortgage payments?

	Most financial institutions give you the possibility of making weekly mortgage
payments, and this can provide you with thousands of dollars in savings. On a 10%,
$80,000 mortgage, you could save up to $30,000 in interest by making weekly payments.


# 20 - 	Are diamonds forever? Are they a sound investment?

	Investors who are fortunate enough to hold a large portfolio, investment in
precious stones and precious metals may be included as 5% or less of their total assets.
However, only perfect diamonds of an acceptable size (at least one carat) hold a
theoretical potential for increasing in value. A better alternative is to consider diamonds
as special gifts for special occasions for the loved one; if carefully chosen, diamonds will
keep their value over many years.



# 21 - 	Is income splitting for tax purposes still allowed?

	Starting with the taxation year 1995, income splitting will be allowed only when it
benefits persons suffering a mental or physical disability or impairment. However, estate-
type family trusts are still allowed and they provide a way to shelter part of your income
from the taxman and to the benefit of your heirs.


# 22 - 	Did you know you can manage your RRSP portfolio yourself?

	If you are knowledgeable in financial matters and know how to decide which
financial products will suit you best for investment in your RRSP, you can manage your
own RRSP. Your financial institution will charge you a flat yearly fee. Thus, you become
free to manage your own portfolio and include more speculative investments. However,
you must spend many hours to keep abreast of the securities markets by reading the
specialized media and keeping in close contact with your securities dealer.


# 23 - 	Did you know that smoking involves major costs
	beyond 	the mere purchase of tobacco products?

	The annual premium of a life insurance contract will cost an average of 20%
more to smokers than to non-smokers who enjoy special discounts. This additional cost
may well represent $200 a year and that does not yet take into account the cost of the
health problems related to smoking. While everyone is free to smoke or not, the cost of
smoking, in terms of individual financial protection, is far from being negligible.


# 24 - 	Did you know that your life insurance agent actually is a multidisciplinary
	financial adviser who can help you plan your financial needs and build
	for you and your family a solid, well-managed asset base?

	Today, most chartered or licensed insurance agents have a vast knowledge and
understanding of financial planning and thousands of them have several professional titles,
including that of Financial Planning Adviser, which allow them to provide you, in the
comfort of your own home, with a full range of financial services.

# 25 -	Did you know that third-party liability is a must?

	If you do not have it, a pizza delivery boy's broken leg may cost you an arm and
a leg! The fact is, in case someone breaks a leg on your icy front door steps, this can
cost you dearly and for many years to come. Third-party liability insurance is available for
a few dollars when you purchase property insurance (covering fire, accidents and general
risks) from your insurance broker or your life insurance representative who often has the
expertise and the required licence

Personal Finance Tips is a service provided by your
financial adviser, a member of the Association des
intermediaires en assurance de personnes du Quebec, AIAPQ.


DAVE's  - PERSONAL FINANCIAL TIPS
Independent Financial & Insurance Services


I. F. I.S., where...  [dpg@oath.com} or [dphilips@ican.net]

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