Raise your hand if you've ever hung yourself financially by getting into the best-marketed "tax shelter" investment of the day.

Thinking "I pay too much tax," we become tax motivated in our investment decisions. We then go looking for tax opportunities that have lots of "big hit" investment potential. Good marketing increases the appeal.

Remember films in the early 1980's? Leveraged mutual funds in the mid-1980's? MURBs in the early 1980's?

Too often we hear ourselves say, "I borrowed some money for this great investment. It costs me almost nothing because of write-offs, deductions, depreciation, and tax incentives." (The after tax cost of a $10,000 investment can be as low as $2,500.) Then the market crashes and the investment fails.

Just when you were about to call the bank asking for some breathing space on payments--ring, ring; the bank calls. "We're a little concerned about your investment. We may need more than the interest payment on the loan. We may also need some additional security." It's funny how this often happens at the same time.

Cash gets tight; you're overextended; business is slow; you're not sleeping well. You have to sell at a loss to repay some of the debt. And you take out a second mortgage on your home to repay the rest. Additional legal and accounting fees make your cash flow tighter than ever. How long until recovery?

There is a better way. Recently, the trend has been towards a more long term, conservative approach to tax-sheltered investments.

Perhaps this could be an effect of our current economy, or an optimist might say that investors are becoming more motivated to acquire tangible assets than net worth on paper.

These new tax shelters are right in our own back yard. They may lack the glitz and profile of flashy shelters from bygone days, but they work. For example:

• Are you paying down the nondeductible mortgage on your home as a first priority?
• How about rental property? All or part of your mortgage may be tax deductible, and there may also be maintenance write-offs and even capital gain potential.
• Are you paying your annual RRSP "bill"-maximizing your RRSP deposits through the new increased contribution limits? Larger contributions mean larger deductions. If your salary is not high enough to make large contributions, net rental income, for example, also qualifies as earned income for RRSP purposes.
• And remember to use spousal RRSPs to help accumulate assets equally between spouses and reduce income tax after retirement by up to 35%.
• If you are incorporated to access the small business deduction, are you now implementing an executive shareholder's pension plan with your other shareholder (i.e., your spouse, with whom you are splitting income for tax purposes)?
• If you need insurance, are you maximizing the deposits allowed under a universal life plan? Such plans offer guaranteed term insurance plus tax investments ranging from term deposits to stocks. Universal life plans are like having a long-term, tax-sheltered term deposit with much higher yields.
• Is the lower-income spouse making investments while the higher spouse pays all non-deductible bills and debts?
• Are you maximizing the potential of the current $100,000 individual capital gains exemption through blue chip stock and mutual fund portfolios?

As other tax shelters rise and fall, these sleepers live on year after year.

If you must decide to invest in tax shelters that promise big tax breaks in exchange for relatively big risks, then research the package and get unbiased advice.

Even if the actual investment within the tax shelter is good, the surrounding factors (management, tax implications, commissions, financial stability, etc.) can make or break you.

The moral of the story: have the patience to profit by being one of the few, not one of the many.