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RESP Savings Accounts
January 16, 2011
5:37 pm
Andrew
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I have only discovered two RESPs that are structured as a simple savings account:

1) Scotiabank (http://www.scotiabank.com/rate......html#resp)
2) ATB Financial (http://www.atb.com/Dev/investi.....ics.asp#14)

Both of these have low interest rates. Does anyone know if there is such a thing as a High Interest RESP? I am mostly interested in maximizing the grants, but it would be nice if the money parked in RESPs also earned a decent interest rate. I've looked into scholarship trusts such as Heritage (http://www.heritageresp.com/) and Canadian Scholarship Trust (http://www.cst.org/) but their contracts are way too complex and their non-profit fee structure and investment portfolio seem questionable to me. I have been looking at this on and off for two years and find RESPs to be very confusing. Any insights would be much appreciated.

Thanks!

January 17, 2011
4:28 pm
kilarney
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we had an RESP at CIBC and I have to agree with you that the rates are very low. The extra top up money from the government is nice but it would be great to have it actually earn a decent rate of return too. I dont have any tips for other options but I think it is also important to realize that in all forms of savings you still have to make the committment to regularly deposit cash to reach your goals. Many people think it is just a matter of starting a plan and depositing just a few times then waiting for the big payoff. Growing savings is a longterm disciplined committment. It is so easy to short change your future by spending on crap you dont need right now.

January 18, 2011
9:03 am
Michael
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We have our 3 children's RESPs with Fidelity and it is all invested in mutual funds. Yes the risk is higher than a standard savings account but over time the stock market is a proven performer and in my case we have at least 14 years before we need to touch any of it.

February 17, 2011
1:12 am
zed
Guest
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Thanks for the info!!

February 17, 2011
4:47 am
guest
Guest
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I opened a self-directed family RESP at Questrade as soon as I got a SIN for the first rugrat (there are now two of them). I'm investing aggressively in stocks to start with, but I'll switch to more conservative investments as the kids get closer to post-secondary age. Hopefully one year's worth of tuition at a public university will be under $20,000 in 2030......

March 2, 2011
5:03 pm
danny cheng
Guest
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There are lots of choices in this market. It all depends what you want in life. As I always remind people I know regarding the setting up RESP which fulfills the following conditions. 1. The contribution amount should be save with no downside risks. 2. The Canadian Education Savings Grant should be eligible. 3. The fees, if there are any, should be explained clearly. 4. The returns should be reasonable. and most important of all, 5. The overall amounts of the plan upon maturity should be more or less in line with my savings objective based on the agreeable amount to be contributed.

Therefore, I would recommend you to have the trusted advisor who can sit down and spend time in explaining to you before you commit on this for the brighter future of your kid.:smile:

Andrew said:

I have only discovered two RESPs that are structured as a simple savings account:

1) Scotiabank (http://www.scotiabank.com/rate......html#resp)
2) ATB Financial (http://www.atb.com/Dev/investi.....ics.asp#14)

Both of these have low interest rates. Does anyone know if there is such a thing as a High Interest RESP? I am mostly interested in maximizing the grants, but it would be nice if the money parked in RESPs also earned a decent interest rate. I've looked into scholarship trusts such as Heritage (http://www.heritageresp.com/) and Canadian Scholarship Trust (http://www.cst.org/) but their contracts are way too complex and their non-profit fee structure and investment portfolio seem questionable to me. I have been looking at this on and off for two years and find RESPs to be very confusing. Any insights would be much appreciated.

Thanks!


March 2, 2011
5:13 pm
danny cheng
Guest
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Please go to this link of http://en.wikipedia.org/wiki/D.....al_Average and compare the overall return of last 10 years. This is just to make sure you cash out your money at the right time with no loss. I know how to safe guard this.

Michael said:

We have our 3 children's RESPs with Fidelity and it is all invested in mutual funds. Yes the risk is higher than a standard savings account but over time the stock market is a proven performer and in my case we have at least 14 years before we need to touch any of it.


March 4, 2011
1:02 pm
Dan
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danny cheng said:

" 1. The contribution amount should be save with no downside risks."

That is quite literally the WORST single piece of advice anyone could give out on any investment with a 15-20 year time horizon. That will limit your choices to Gic's, real bonds, term deposits etc.. Exactly the wrong type of investments for young children to be making for 17 years or so.

March 13, 2012
9:28 am
ann
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I have just one daughter at the moment, but we do plan to have another child in the next couple of years. Do you think it would be better for us to open a family RESP instead of the individual? Is there really much of a difference? I mean I can open another for my new child when he comes right, so why bother have the family type instead? Also, anyone with RESP with BMO investments?

March 14, 2012
8:37 am
guest
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I think family acocunts are easier to manage because there is only one account, and there are no arguments over why one kid's acocunt performed better than the other kid's acocunt due to different investment choices, etc... I will tell my kids that tuition for their first undergrad degree will be taken care of, regardless of how well or poorly the RESP investments do. That way, there will be no arguments over one kid drawing down the account for a degree, then 5 years later another younger kid wants to do the same but can't because the financial markets tanked after the first kid took out his/her share. Parents are always acting as guarantors for their kids one way or the other anyway. If one of the kids decides not to go to university, they can use the RESP cash for college or trade school, but under no circumstances will I give them any of it as a cash-out gift. That kid's share is then split evenly among the remaining kids who did go to uni/gollege/trade school. Dem's the rules in our house.

October 28, 2016
10:51 am
darylshriver
Toronto
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Another question to ask is if your RESP Provider offer government grants in conjunction with their RESP accounts - Knowledge First is one of the few to offer the BCTESG. Of course, this applies only to residents of BC - but still good to note.

October 29, 2016
12:43 pm
Rick
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February 17, 2013
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ann said

I have just one daughter at the moment, but we do plan to have another child in the next couple of years. Do you think it would be better for us to open a family RESP instead of the individual? Is there really much of a difference? I mean I can open another for my new child when he comes right, so why bother have the family type instead? Also, anyone with RESP with BMO investments?

Don't forget...just because you want your kid to go to university and become a doctor or lawyer, doesn't mean that's what they will want to do. Both our kids went into the trades and the first year of apprenticeship was covered by the school board . They both graduated high school as ticketed welders and started work immediately. Upgrading two more levels cost a grand total of $1500.00 each plus supplies. With that in mind, especially if you plan on having more kids, I would start a family RESP instead of an individual ones. You may end up with a large RESP fund in 15 or 20 years that isn't needed. Haven't checked in the last 15 years or so, but don't forget to find out what happens to the interest, govt matched funds and taxes if you want to cash it out without using it for education... you may have to use it to get an education yourself.
sf-frown

October 29, 2016
1:42 pm
Norman1
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April 6, 2013
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Rick said

… Haven't checked in the last 15 years or so, but don't forget to find out what happens to the interest, govt matched funds and taxes if you want to cash it out without using it for education... you may have to use it to get an education yourself. sf-frown

There can be up to five components to the assets of an RESP:

  1. subscriber contributions
  2. Canada Education Savings Grant money
  3. Canada Learning Bond money
  4. money from a Provincial Education Savings Program
  5. earnings on the money invested in the RESP

An earlier post explores what can be done with the money in each of those components.

October 29, 2016
7:27 pm
lhsaid
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Ann, we have our RESPs (two kids) with BMO, it is self directed ETFs, they seem to be doing OK so far. the service is good too. Hope this helps.

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