The Rural Voice, 1990-04, Page 18PORTABLE
SEED CLEANING
BOOK EARLY
PORTABLE SEED CLEANING&TREATING
s.w.c,..a.I4519371.0606 ro-ssmu
Save time, trucking
and money
Clean & Treat
Your Own Grain
Two machines available
Call Now
COOK
PORTABLE SEED
CLEANING
R.R. 8, Owen Sound
519-371-0605
NEW VIC
DUMP WAGONS...
Hundreds of
uses
•
5-7 TON
• Hauling wood
• Hauling & spreading gravel
• Moving grain, corn, silage, bales,
bulk fertilizer, vegetables
• Stone removal
NEW VIC
MANUFACTURING
LTD.
LOUISA ST., BOX 33,
AYTON, ONT. NOG 1C0
519-665-7562
14 THE RURAL VOICE
WISE MOVES
Financial Strategies for Farmers
-b Watkins
"Wise Moves" is a series of articles provided by
Watkins, Daugherty & Associates. Taking as a
case study the farm of "Martin Wise," financial
experts Richard Daugherty and Bob Watkins
outline various ways that farmers can enhance
their financial planning and security.
Your questions and comments are wel-
come: telephone Bob in Lucknow 528-3514,
Richard in Listowel 291-5040, or Kitchener
(Imperial Life regional office) 744-5281.0
Richard Daugherty
EDUCATION PLANS FOR CHILDREN
Mary and I have always thought
that we would like our son Bradley to
take over the farm when we retire. He
already has thoughts of going to the
Ontario Agricultural College.
We decided to ask our insurance
representative about setting money
aside for both Brad and Cynthia. We
had noticed various education plan
brochures in offices around town and
wanted to know more about them.
Our representative told us that, in
general, these sorts of plans are called
"Registered Education Savings Plans"
(RESPs). They are simply education-
al trust funds run by an organization.
The money put in is not tax-deductible
but the interest earned by the money in
the plan is sheltered from tax.
When the child goes to college or
university, the fund is used for educa-
tion fees and expenses and counts as
income for the child. If the child earns
too much money in one year while
going to college, he may have to pay
a small amount of income tax on the
money he receives. However, he can
claim income-tax credits to offset
some of his education costs.
Frequently, the plans will not pay
for second -year expenses unless the
child completes the first year success-
fully. And to get full value from these
plans, your child has to go to college.
If he doesn't, in many cases the par-
ents can get back only the money they
put into the plan, without interest.
We asked our representative how
much money would be needed to pay
for a university education. He said
that today a minimum required would
be about $6,000 a year per child. So,
for a four-year program, $24,000
would be needed.
Bradley is now ten. If he goes to
college at 18 and inflation runs at 5
per cent a year, we will need $35,500.
If we could find an investment that
gave us 10 per cent interest, we would
need to put $235 a month into the plan
for eight years. Our total payments
would be $22,560 and the interest
earned would be $12,940.
Our representative suggested that
he set up a plan that is not registered.
We would not be able to deduct the
earned interest, but if neither Cynthia
nor Bradley went to college we would
have the full $35,500 to use for our
retirement or anything else we wanted.
One further possibility would be to
set up a self-directed education trust
and name Bradley and Cynthia as
beneficiaries. We would have to pay
fees to have the trust set up and
registered legally. The interest would
be tax-sheltered. But if the kids did
not go to college, we could nominate
our grandchildren or our nephews and
nieces to receive the funds — or I
could go to college myself!
Note: the February 1990 federal
budget proposed to limit contributions
to any RESP to $1,500 a year, and
these plans will not be allowed to exist
for more than 21 years.0