This & That: Kids’ Education Edition
Posted by Gail | Filed under Kids & Money, Students, This & That
Last week I started working with a Princess whose parents tried to give her everything. After years of scrimping to put money away in an RESP for her, they watched as she dropped out and blew their savings. The problem: they had been sold a Group RESP and had to forfeit all their contributions when their daughter didn’t use the Group RESP in the prescribed way. Oy!
People, pass it on. Group RESPs are a bad idea. Read on and you’ll see why.
Jamie-Lee wrote: We purchased RESPs for both our children (3 and 1) through “USC”. When we met with the rep and talked, My husband and I made sure to ask about what happens if we need the money for an emergency, and were told that we could take it all back out, minus the interest and government grants the accounts had accumulated. So, times are hard and i had to make that phone call to cancel the RESPs and withdraw the thousands it had accumulated (we have been paying $103 a month for each child). To my surprise, they said i would get 0$ back as all of the “administrative fees” were lumped together off the top. So all of the money weve been paying have gone to pay for administration fees for years that havent even passed us by. I cant imagine closing the accounts and loosing those thousands of dollars weve scraped up to help our children when they go to school, but i cant afford the monthly payments right now. They let me put it on “hold” for two months while i straightened things out, but it just wasnt enough. Do you suggest closing the accounts all together, taking our loss and thinking twice about RESPs next time, or should i make my payments as low as possible (i think they have $20 a month plans) and see what we come out with in the end?
Jamie-Lee, you have just described why I am not a fan of Group RESPs. I’ve written about them on my site, and have urged people to choose individual or family plans as alternatives. The problem is not with RESPs, it is with the provider you’ve chosen. Many people have had similar experiences and I’m sorry you got so badly burned. Perhaps you’ll tell your friends of your experience and urge them to pass on your story so others aren’t affected as you have been. I don’t have a solution to this problem for you. You were deceived, and that’s the sad reality. If you decide to open RESPs in the future, I strongly urge you to do so at a financial institution that offers individual or family plans and steer clear of group plans.
J wrote: I have a question I hope you can answer. I do live in Australia but still hope that the question is a global one and not a Canada based one.
I watch your show whenever it is on here and am an avid follower of your blog. I have saved $27 000 and intend that it be used for my child’s future. He is seven years old and I hope that by the time he has finished high school it will have grown to $100 000. That is the plan anyway! Some years I will be able to save lots and other years it will have to be scaled back. What is the best way to deal with this money? Should I invest it or is leaving it in term deposits a good idea too? The whole stock market goes over my head so I feel uneasy about doing that and am quite happy to leave it in the term deposits but will I be doing my son out of a lot of money but not being adventurous?
J, if you son is 7 now, that means he has about 10 years before he’ll need that money, right? That takes you out of the “growth” arena — think stocks — since the money wouldn’t have time to recover should the markets take a dive between now and then. You are also pretty conservative in your investment personality… “The whole stock market goes over my head so I feel uneasy about doing that and am quite happy to leave it in the term deposits.” So will you be doing your son out of lots of money by being conservative? Maybe. If you were to dump all your money into the market today and if it were to rise 12% a year for the next ten years, he’d have a LOT of money. But the key word in that sentence is “IF.” There are no guarantees in life, and certainly not in investing, unless you buy them… and you pay for guarantees with a lower rate of return. Being more conservative makes sense when you’re counting on the money. (Hmmm. Are we ever not counting on the money?) You must choose investments that you feel comfortable with so you can sleep at night. Never mind keeping up with the Investment Joneses. Do what is right for you and your boy.
Lynne wrote: Hi Gail, Thanks for ALL you do! My youngest daughter (age 14) receives a monthly allowance. She will soon be working a part-time “real” job with regular hours and regular pay cheques. She is a good saver. In your opinion, what should we do about continuing the allowance? Should we now put it into her RESP? Or is “taking it away” once she is working a punishment for being productive? I’m VERY interested to hear your opinion and you can be sure your advice will be eagerly received by many other parents I know! All the VERY best to you, Lynne from Calgary
Lynne, my daughter, Alex, and I had this same discussion several months ago just before she started her first job. She wanted to know if I would take away her allowance. I said, “You mean dis-incent you to work?” I think removing the allowance would be, as you say, “a punishment for being productive.” Alex and I talked about why she’s working and what she’s trying to accomplish. She needs to save up her share of her first-year costs for university. I suggested a 30/70 split for spending versus saving so she could accumulate the money she needed. She decided to go with a 20/80 split since as she said, “my allowance is enough to meet most of my needs.” I think if you have the resources and can use this as a lesson in how to meet long, medium and short-term goals, that’s what you should do. Not all of us have the resources to help our children, but those of us who do are lucky and should take full advantage of the important lessons we can teach.
Kerri wrote: My Ex has paid $200/mth into a Investor’s Group RESP for our daughter (Sami) since she was 6, she’s now 18. My husband and I are now wondering if this money should go into a Mutual Fund Acct since she has approx $20,000 in the RESP and no interest in furthering her education (The Ex has not mentioned discontinuing these payments). At 15 Sami started putting $300/mth (She works for us and earns approx $15,000/yr) into mutual funds and used the money this past Apr to purchase her 1st car $10,000 down and making $300/mth payments to us as the loan comes out of our acct because she was too young to get a loan for the remainder. Which leads to another question sorry! Should we pay the $400 to transfer the paperwork into her name fully or allow her to get a credit card to build her credit rating (she has just started watching the show and raised these Q’s herself) Thank You in advance
You have a bunch of questions here and I’m going to start at the end and work backwards Kerri. Do not waste $400 transferring the car to her name. But she can get a credit card in her name, use it, pay it off in full every month and start building a credit history that way. Now, to the RESP question.
When your child does NOT use the money in an RESP, the principal can be returned tax free to the original contributors. However any grant money received from the government would have to be returned. And the income earned on the plan will also be taxed. You could wait a while if you think she may want to continue studying later since RESP accounts can remain open for up to 36 years. If either you or your husband has unused RRSP room, you can transfer the money to a RRSP to help you save for retirement. So you could put off making your RRSP contributions for the next couple of years to create this room if need be.
E wrote: Really love your show and have learned a lot from watching you. I am now a great aunt and godmother to a beautiful baby girl. I checked your blogs and could not find anything written about RESP. I would like to contribute to a RESP for her and would like some more info. Am I able to set it up or do the parents have to do this. How much do I need to start? I plan on contributing on a monthly basis so I need some info. Where do I do this-a bank or insurance company? Any help would be appreciated.
E, you can most certainly contribute to an RESP on your granddaughter’s behalf. You need only her name and her social insurance number, which her parents must apply for. Please stick with an individual RESP available at your local bank. Group RESP, sometimes called “scholarship trust RESPs” aren’t such a great deal, according to a recent government study.
S wrote: I was hoping for some *clear* advice regarding Registered Educational Savings Plans. I would like to make some donations to young people by setting up RESP’s for them in order to take advantage of the government’s 20% matching program, BUT everything I have read says I must be related to the child by blood or adoption; and that I need to know the child’s Social Insurance Number. I’m in a position to give back and I thought this was one way to do it, perhaps for members of the local Boys & Girls Clubs or kids in foster care in order to give them a head start on university or college educations. So….is there any way to set up “arm’s length” RESPs for kids I am not related to? I really think this is a good vehicle to save for kids educational futures, if one starts early enough and contributes enough. Thanx very much for your help!
S: Anyone can contribute to an individual RESP for a child. The only time contributions are restricted to “family” is if a Family Plan is opened where more than one child in a family can benefit. Please do not consider using a Group RESP since the government has published a report that says there are significant problems with these types of RESPs. Stick with individual RESPs offered by most major financial institutions. Some of these FIs also offer an RESP gift card or gift cheques that can be used to invest in new or existing RESP account at that institution. Here’s a link you can follow to see an example of what I mean.
Pop over to CanadianCapitalist. He has a link up to a Frontline show on credit card companies and how they managed to grab so many people and haul them into debt! Many of these same practices have been imported into Canada. And many of the U.S. companies that seek to trap what they term as “profitable” customers are targeting Canadians. I’ve written about this before when I had trouble with my HBC credit card and decided to cancel it. I had to report the card lost because they would not cancel the card.
January 27, 2010 at 7:08 am
Thank you for telling people like it is regarding group RESP (correction made) plans. I too was burned by a family emergency and needed to ‘circle the wagons’ by closing down and stopping all extras. The plan I had using TD E-Funds was simple to close and very easy to deal with. My group RESP took forever, cost me thousands due to the shackle fees, and was all in all a terrible experience to try to get anything done.
I urge everyone to avoid group RESP plans like the plague.
January 27, 2010 at 9:11 am
I also jumped on the USC Wagon when I shouldn’t have. I made the decision to cut my losses and transfer the plan to one with my FI. My son was 3 at the time and I think I lost close to $1000 but, that’s the choice I made. I feel better having the money in a fund that I have control over. I’m glad my son was young enough that, hopefully, it won’t have a big impact on his future. Since opening it shortly after he was born, we contribute $50/month. Maybe not as much as we will need, but I don’t plan to fully fund his education for him – I’m simply giving him a helping hand along the way. I want him to work towards the cost too so he can truly appreciate the opportuntity.
January 27, 2010 at 9:46 am
I am absolutely late to the RESP game. I actually am making an appointment today (hopefully for later this week) to begin plans for my children. They are 15 and 12, respectively. Reading a previous RESP here from Gail encouraged me that it is not too late. Now that I am finally learning and understanding money, I have enough to start contributing to plans for them both.
I am reading and re-reading everything you’ve written here Gail to learn as much as I can before I go. Thank you for these topics. I will feel ‘less stupid’ when I go, and I’m excited to make another Grown Up step in my life.
January 27, 2010 at 10:13 am
J in Australia, if you’ve managed to save $27K so far for your son’s future without higher risk investments like stocks, why change what ain’t broke? You’ll be doing your son a lot of good with that money, even in GICs / term deposits, and whatever additional savings you can put aside over the next 10 years. JMHO.
Gail, I wish I would have read about your HBC card issues earlier; might have saved me some headaches. I also recently cancelled my card with them. I requested a letter confirming the account has been closed, but I’ll make a point of double-checking this on my credit report when I order it again in a few months.
January 27, 2010 at 10:23 am
@ Jolie – you can make retroactive contributions for the past 8 years, I’m not sure about exact years but it’s a ways back. And you get the 20% match from the government. The catch is that you can’t get more than $1000 a year from the government (so if you put in $5000 this year, that would be the contributions for 2002/2003 and you get an extra $1000 from the government). Then next year, do 2004/2005 contributions, etc.
@ All — group plans are truly terrible. Thanks to the internet, I was able to avoid this situation and highly recommend td e-funds for an resp. Visit here and read the comments about group plans — this may help those trapped in them too, there may be things that you can do. http://www.milliondollarjourney.com/registered-education-savings-plan-resp.htm
January 27, 2010 at 10:29 am
This post has put a lot of questions into my head that I’m going to go get answered now. I have three children, each with their own RESPs, and although I’m pretty sure they aren’t a “group” RESP, I now want to make sure. We have ours set up with Investors Group, with whom we also have our investments. It’s nice knowing that the gentleman that we work with knows our whole story so he’s looking out for us and our money and our children’s future education.
January 27, 2010 at 10:30 am
To Jolie
I lost a lot in RESPs when the tech bubble burst…stuff happens and you do your best. I don’t think it’s too late to start RESPs with very conservative investing (with almost NO loss tolerance cause you don’t have time to make it up). But If you can manage to contribute the max for each child, you will effectively make a return of 20% on each year’s contribution, because of the government top up. Effectively, you’ll get at least an extra $2000 just from the grants…not to sneeze at!
January 27, 2010 at 10:31 am
Also @ Jolie — I would strongly recommend you invest your resp in very secure/stable instruments, such as GICs or bonds or the like.
@ J – I don’t know if it needs to be an all or nothing proposition. My son is 2, and I put 20% of his RESP into the bond market (safe) and 80% in the stock market (low cost index funds). I too knew nothing but by not jumping into anything and researching it was pretty straightforward to get going. I invest in the same products I buy everyday — cocacola, microsoft, mcdonalds, bank of montreal, etc and feel comfortable, but you could always bump that up to 60% in bonds if you wanted.
January 27, 2010 at 11:12 am
wow – Am I ever glad my financial planner advised me to go with an individual plan RESP and set it up that way. My heart goes out to those that had the group RESP and got burned.
These kinds of things just makes me so mad!
January 27, 2010 at 11:23 am
Thanks for this good info. I’m puzzled by something. If a child ends up not using the RESP then we have the option of rolling the amount we contributed into our RRSP. We have already paid tax on the money contributed to the RESP. If that contribution then got rolled into the RRSP we’d be paying tax on it again in retirement. I cannot see the benefit of doing that. What am I missing?
January 27, 2010 at 11:30 am
Yay! This post came right on time! I’m expecting in May and I was just looking on the federal and provincial sites about child and family programs last night trying to sort through the benefits (UCCB, CESG) that are available. I’ve heard that Group RESPs are not the greatest idea and it’s good to know why and see how they’ve failed some investors. This post has definitely given me some clarity on how to proceed.
And I LOVE the idea of gift certificates for RESPs…I might try to register for some for my baby shower
January 27, 2010 at 11:39 am
Joli – We also started late with RESP, our kids were 13 and 11 at the time three years ago. We’re catching up 1 year each year to get the max grant. Went very conservative with a family plan high (yeah right) interest savings account which has no fees. We ran the numbers as wondered if we’d be better off putting towards paying down the mortgage instead at 5.15% interest, though the grant makes the RESP more appealing. Time will tell whether it was the right move or not. Good luck. Late start may not be optimal but will help ease the load.
Geoff – from what I could tell there’s an annual fee with the TD RESPs, is this so? I’ve thought of switching to TD bond fund for the RESP, though thought the benefit of the bond fund over savings account once fee taken into account would probably not be worth while. Oldest turning 17 (last year we can contribute for her) so want to stay safe.
January 27, 2010 at 11:39 am
http://www.ehow.com/how_2214467_avoid-penalties-resp-account.html
My understanding (and indicated in Step 6 of the link above) is that providing you have the RRSP contribution room you can move up to $50K to your RRSP in the event that the RESP is not used with no penalty/taxes. If you take the money in cash you will pay taxes and a 20% penalty. In all cases you will still have to pay back the CESG grant but you keep the growth.
January 27, 2010 at 11:44 am
I’m glad that at the moment I don’t have to worry about RESPs (I have no children) However I’ve never been a fan of Group anything … There are Group RRSP and RESPs at work and I can’t stand that stuff I have my RRSP money in my individual RRSP, I’ll never join a group anything I’m very independant.
regards,
Jason
January 27, 2010 at 11:53 am
Lynn C – Your baby has one smart Mom! Mosty baby stuff is uncecessary though adorably cute. Given an option I’d so much rather contribute to an RESP over buying some cute stuff in the early years. The exception would be with struggling parents, then I’d prefer to buy diapers.
January 27, 2010 at 12:01 pm
Geoff and I are of the same mindset. I put my son’s RESP into a self-directed TD waterhouse account and I buy index funds for him. I think it’s the best way..
January 27, 2010 at 12:02 pm
Great information Gail. I agree with those here who say that conservative is the way to go, especially if your kids are older. The main reason to go with the RESP at all is the 20% grant. Preservation of capital is paramount.
We have managed to remain even on the money in our family RESP, although it has been sitting in a brokerage account earning zero for over a year now. I’m going to call and put it in a GIC right after I hit send here. I’m not thrilled about a 2% return, but it sure beats a goose egg, and the money will be safe. My 2 oldest are 14 already!
January 27, 2010 at 12:28 pm
This is a very timely read for me, as we are due with our third child…..tomorrow!
My first daughter is almost 13, and her father and I set up a USC account (unfortunately) for her when she was 1. I signed it over to him about 10 years ago when we split, so I don’t know what he decided to do with it. Your blog reminds me I need to get in touch with him to make sure that we’re on the right track about her university costs…5 years goes fast!
My second DD is 4 and my current husband and I have been saving in an individual RESP for her for two years. I can sleep at night with this one……LOL.
My question now was what do we do with third baby?? We didn’t open the family plan because we thought my 2nd was the only one that would use her plan (as I’m assuming oldests’ needs were going to be met). I’m considering opening a family plan for this baby and my oldest – just in case the oldest needs more than the USC account can provide, and if not, then it will be there for baby #3…
Or, do I just stick with an individual RESP for baby #3?
And then there’s the issue of RRSP contributions. I have lots of room in my RRSPs. Someone suggested to me that what I should be doing instead of contributing to RESPs is maxing out my own pension plan first, then take a lifelong learning plan out when my kids need $$ for school.
Decisions, decisions!
January 27, 2010 at 12:28 pm
@ Lane – TD will have many funds some that will charge fees. I’m speaking specifically of TD e-series index funds here, and know there are NO annual fees involved with them. See Canadiancapitalist.com and look up resp. There are penalties if the money is in the funds for less than 90 days however. Keep in mind there are “fees” and there are “MERs” and a high MER might cost you 2% of your total investment even if there are no official fees. TD efunds have very very low MERs and no fees.
@ 2 cents – I agree with you – conservation of capital is required – but for older children only I think. For those with younger children and can accept some risk, I invest in equity funds that go up and down over the years, but overall head up. Investing money in a GIC that pays 2% when your child is one years old is not entirely safe — you are exposed to risk that inflation will eat your return. My plan is to move from stocks to bonds/cash/gics as my son ages. Right now I put 20% in safe, 80% stocks. When he’s 13 years old, I’ll start shifting and by the time he’s 16, 90% safe, 10% stocks. I like those dividend payments too! At least, that’s the plan!
January 27, 2010 at 12:29 pm
Thanks for the link Joanne. I’m still fuzzy.
I’d thought the 20% penalty was paying back the CESG which is 20%. So is there an additional 20% penalty which you would avoid by using the RRSP option?
http://www.canlearn.ca/eng/saving/resp/faq.shtml#m
I have no problem with paying back CESG if RESP is not used – that’s fair. However if there is an extra penalty on top of that besides tax on interest earned which I also see as fair, then I’d be ticked. I’ve have heard different interpretations of this ‘penalty’.
It seems the perceived benefit to transferring to RRSP is to save on the ‘accumulated income’ – basically tax on the interest earned. If there is a 20% penalty over and above paying back the CESG of 20% then I can see this maybe being a good option, but if you only pay back the 20% CESG and then pay at your marginal tax rate tax on the interest earned (minimal in a vanilla savings account) it would be better in TFSA for example that put into RRSP which is taxed again.
January 27, 2010 at 12:35 pm
Thanks Geoff. I have the TD e series as part of my RRSP. Jumped through a million hoops to get that set up as I don’t bank with TD. Now it’s working out nicely though. Just couldn’t see on the website where they waved the fee for RESP. I think you have the best strategy going considering kids ages.
January 27, 2010 at 12:41 pm
Gail I love your link to that Frontline report. It is an amazing report that opened my eyes to the reality of credit cards etc… I urge everyone to view it.
As for HBC I too had prolems with them when I too bought some hand cream and put it on my card. When my statement came in it showed a zero balance so I called them and found out it was on another account which I had closed many years before. I also found out I had another active account which I didn’t know of or even if I had ever applied for. I tried to terminate the accounts which is more than just closing them so that none could be used. They gave me the run around when all of a sudden I got a new card in the mail from them. In the small print was all the info I needed so I called them with their own fine print in hand and read to them their own rules of their game and told them I would take action if they didn’t inactivate completely all of the accounts and disable new cards from being sent to me (since one was now showing as sent but not activated and it wasn’t the one I had). They had no choice but to comply. I too checked my credit report and all their accounts were disactivated. I was scared as to who was using the other account and where the lost card ended up. They said it was normal, and I said it could be identity theft and that they were making it easy. That is why I will never have a card from them ever again. Please be careful and check with them as to how many accounts you not only have active but how many are closed and if any cards were sent to you. As Gail said check your credit report closely.
January 27, 2010 at 12:59 pm
Credit card payments:
Beware! Some credit cards are LOWERING their minimum payment. How nice…
January 27, 2010 at 1:02 pm
@Rose; I believe the Lifelong Learn plan pulled from your RRSP is for YOU only and can not be applied to your children. I would check to make sure before I put money in expecting to be able to pull it out and use it for your children’s education. I had 2 individual plans and have recently converted (merged) them to a family plan. However, my children are the same age (twins) so they are likely to go to school around the same time. A family plan avoids having to transfer funds to another child but also since my children are the same age and likely will go at the same time but might go to different schooling options (college vs university) I didn’t want to be strapped to not being able to access the additional funds that might be required for one to go to university vs college. This way with a family plan I have access to all funds rather than just what is in their own individual plan.
January 27, 2010 at 1:40 pm
I made a mistake in my posting. My problems were not with HBC but with Chase/Sears and my accounts are showing as “Account closed at consumer request”.
January 27, 2010 at 1:54 pm
Thanks for all the good RESP info. We are expecting in the summer, and have already recieved a few hundred dollars in gifts for the baby, from family. I will get a SIN card and put the money in an individual RESP, so this baby doesn’t have to work 3 jobs through University or go into debt!
January 27, 2010 at 3:01 pm
@Gail: Thank you for the mention. I was thinking that the show should have let you handle the freelance writer who pays just the minimum balance and complains that the credit card company jacked up her interest rates. Hello? How about taking some personal responsibility?
I agree with your first comment on Group RESPs. Jamie-Lee’s situation is a perfect example of why these plans are terrible for most people. Where is the sense in locking up a monthly payment to a RESP plan for 18 long years. Things change, s**t happens and a family should have the flexibility to not contribute for a few years if they can’t afford it. There are many flexible options available and Canadians should research them.
January 27, 2010 at 3:04 pm
@Geoff- I agree. If your wee one is still wee, go ahead and take some equity risk – as long as you are fully aware of that risk. Your strategy of gradually paring back the equity allocation over time sounds like a good one. Good luck!
January 27, 2010 at 4:07 pm
Thanks for the information on the RESPs. Can RESPs only be set up for Canadian residents? Do they have to go to school in Canada?
January 27, 2010 at 4:29 pm
Wow, I just watched the Frontline piece and I have to say that what the American credit card companies have been allowed to get away with is criminal. i can’t imagine opening my cc bill and discovering that the rate had been increased retroactively causing my minimum payment – which for so many people was all they could afford – to skyrocket… Not to mention the concept of lobby groups sickens me as well. I know it’s the ‘American Way’ but that doesn’t make it right!
BUT I also see so many people who took credit for granted. It’s almost as if they expected to be looked after, despite the fact that FIs and CC companies are out to make a buck – or several million… They just want to keep you as a paying customer and take as much of your hard earned money as you will give them.
And boy did we give! And with the state of so many people we’ll be giving for a very long time…
I’m glad we have some legislation here in Canada, but until people start taking responsibility for themselves and their actions, it’s not going to get better; the FIs and CC companies will continue to rake in the cash.
What to do? Pay off the cards, use them responsibly, and buy stock in the FIs and CC companies
January 27, 2010 at 4:47 pm
SophieW:
Canadian legislation is minimal. They limit the interest rate that can be collected but all sorts of ‘fees’ are allowed. Those fees can add up! There are lawsuits, but I do not know how many are successful. I am completely AGAINST retroactive rate increase! The Canadian system needs a bit of tweaking.
January 27, 2010 at 5:43 pm
@ Tamara
The child does need to be a Canadian resident, but they can go to any accredited school anywhere. I have several clients whose children are attending universities in the US, Scotland, and Israel – no problems with the RESP withdrawals, because all the universities are internationally recognized and accredited.
@ Rose
The Lifelong Learning Plan (LLP) is definitely only for you, your spouse or your common-law partner, not for your kids.
http://www.cra-arc.gc.ca/E/pub/tg/rc4112/rc4112-09e.pdf
January 27, 2010 at 6:47 pm
Do group RRSP
January 27, 2010 at 6:49 pm
Sorry about that!! Do group RRSPs work in the same way? That is the only way for me to contribute at work to RRSPs and I am not familar with them.
January 28, 2010 at 12:07 am
Geoff,
Is your son’s RESP with TD Waterhouse? Their fee is $50 per annum correct?…unless the balance is over $25K, then waived. I was just online checking and they have the mutual fund RESP as well. I want to set one up and wondered which one you used (I’m guessing Waterhouse because of the stocks).
Thanks.
Lisa
PS GREAT Post Gail and as usual very informative. You are wonderful!
January 28, 2010 at 4:01 am
I prefer term deposits as our savings investment ensure our savings will remain intact, without withdraw, allowing the investment to grow with interest while the years go by.
January 28, 2010 at 10:00 am
@ Lisa – No – it’s not TD Waterhouse. It’s TD, but their e-funds account. You do not need to open a waterhouse account, there are no fees, and you do not need to open a TD chequing account either. There is a low MER on the index funds. I don’t buy individual stocks, I buy the index funds which compose all the stocks in the S&P 500 etc. I followed the directions below, and a few times I had to tell the TD guy what to do but I got it done eventually.
For more details:
http://www.canadiancapitalist.com/investing-in-td-e-series-funds-for-your-resp/
http://www.milliondollarjourney.com/how-to-open-a-td-e-series-e-funds-resp-account-not-complete.htm
January 29, 2010 at 2:41 am
[...] Vaz-Oxlade also mentions the special in This & That: Kids’ Education Edition. Useful hints on RESPs here as [...]
January 29, 2010 at 6:53 am
[...] See original here: This & That: Kids' Education Edition « gailvazoxlade.com [...]
January 30, 2010 at 5:25 am
A message for S – you can contribute a scholarship at the “Hope for Children Foundation” for fosterkids. The contribution would be tax deductible. You can even have a “named” scholarship if you like that you contribute yearly. Or you can do one year by year. These scholarships go directly to kids in care or former kids in care who are pursuing college or university. The kids have to provide proof of attendance etc. It is a great service to Crown Wards
October 19, 2010 at 12:10 pm
I’d so much rather contribute to an RESP over buying some cute stuff in the early years. The exception would be with struggling parents, then I’d prefer to buy diapers.
*************
smith
Bank Savings Account Interest Rates
December 21, 2010 at 1:02 pm
The credit loans suppose to be very useful for guys, which want to start their career. In fact, it is comfortable to get a short term loan.
May 9, 2011 at 4:00 pm
It seems the majority of the comments pertaining to group RESPs are concerned with how they got burned because they broke the rules of the contract. My children have just completed their 3rd and 4th years respectively at University. My group RESP has covered every bit of their education and I actually have an excess at the end of it all that is tax free money! Where people run into problems, is when they quite the plan or stop making payments. These plans have to run on a contribution schedule because it is a pooled investment, and the funds have to be seperated equally as per what you put into it, when the kids actually go to school. These rules aren’t in place to screw people out of their money, but rather because it has to be done this way. The benefits of these plans are that the pooled investment allows for enhancements to the plan (such as return of membership fees), a guaranteed principle return and they can even provide insurance to cover the costs of your childs education in the unfortunate case of death or disability. Banks and financial planners offer great choices for RRSP and other investments, however putting your child’s education in the hands of the stock market is not the wisest option considering their is only 18 years to save. In the case of a downturn, the investment may be much less than you’d planned on in the first place. That’s a bit dicey if you ask me. I’d much prefer a higher returning group RESP to a low paying GIC or an MER layden mutual fund. Yes, there is fine-print in bank plans too! Don’t be fooled, the average MER on a mutual fund investment is 2.4%. Compound 2.4% on a $2500.00 investment per year over 18 years… Do the math, it adds up to much more than you would pay with an RESP group plan. Just my opinion, we’re all entitled to one aren’t we?