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Thread: Really need RESP help, please!

  1. #1
    Frosh Canuck
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    Alright,

    I think I jumped the gun here. I have signed up with Heritage Education funds but can still back out. I thought it was a great idea because it was easy and the interest rates seemed excellent but now I'm thinking that it might not be the best idea. My son is 2 and I want to maximise the amount of money I get in grants from the gov. I also bank with pc so they don't offer RESPs so I'd have to go looking at another institution. The plan does have hefty fees over the long term but they are returned to you at maturation (18 yrs) but you lose them if you back out before then. I am so confused and just want a simple way to take advantage of this money that the gov is giving out.

    Does anyone also have experience with Heritage Education Funds? I'm finding some people online who are not so happy with the plan.

    Aaarrggh!
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  2. #2
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    I would go with one of the main banks, there's more flexibility and probably less admin fees in the long run than a private education fund. My children have their RESP with the Royal Bank. Your son is 2, so there's lots of time to invest in mutual funds or stocks (the closer you get to needing the money, the less risk you should take). If you aren't comfortable with that, put it in something fixed like a gic or a bond...you can't lose, whatever you put in, you are guaranteed of a 20% return in the form of gov't grant (up to a max).

  3. #3
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    I agree with Marstec.... you cannot lose with an RESP. Get it out of Heritage and move it elsewhere as their fees and administration costs are far too high.
    If your child does not go to post secondary school, you can still get your original contributions back. The growth will be taxable to you (or can be rolled into your RRSP) and the grant portion is returned to the government.
    AmberLab likes this.

  4. #4
    Financial Advisor ashedfc's Avatar
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    True, RESP is a very good thing for children's as it helps them in their post secondary education. It reduces their financial burden, so they can focus on studies & can do really well in real working life.
    Education is witnessing the highest inflation over the last couple decades & it will continue to do so, in the future. This makes it even more important to save for their education cost/ tution /lodging/ boarding.

    Why bother to tie yourself with fees & penalties. I suggest, keep your options open, & deal with an advisor at a bank (or non-bank). Your son has 16yrs to university, in the next 16yrs you will probably see 2or more recession & 2 or more economic boom.
    You have ample time to withdraw money from the account. So, take advantage of the opportunity & do a dollar cost averaging into a fund portfolio of your choice & risk tolerance.
    If you are dealing with a bank, than ask for institutional series (series F), where the fees charged is a lot less.

    You can post here if you have any specific questions..

  5. #5
    CaLoonie
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    Run away from Heritage! The first 3 to 5 years you are not making any money, the monthly contributions you are giving go directly to commissions, fees etc, call them and you will hear exactly what I just wrote. Please consider a bank or a financial institution, please pull your money out now from the crooks aka Heritage. You may want to consider Index Funds as a way to invest your child's education money, index funds provide a very cheap way of investing. Check out money sense magazine for more information.

    http://www.moneysense.ca/2010/01/13/...investing-101/

  6. #6
    Financial Advisor ashedfc's Avatar
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    There are lot of index in the market, & every index has funds offered by several companies. You have to know which index to buy & how much & in what proportion.
    With index funds- you are guaranteed to underperform, as your returns will be less than the underlying index (index performance less management fee).

    Example:
    1. Bond index (sovereign, High yield, Corporate, EM, Short, Long, etc.)
    2. Equity index: S&P, Dow, TSX composite, TSX venture, Nasdaq, FTSE, DAX, CAC, etc..
    3. Currency fund- which invests in currencies
    4. Bullion index which replicates specific or a combination of bullion
    5. CRB index representing commodities in different proportion.

    All are index funds, Which one to buy & how much is where the problem is & requires individual analysis..
    Just recommending to buy an index fund, is not a right recommendation.

    Found this picture, very interesting & self explanatory;
    It shows the need for parents to plan for their kids education needs

    Last edited by ashedfc; Tue, May 1st, 2012 at 03:22 PM.

  7. #7
    CaLoonie
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    From Moneysense magazine

    If you are an index investor, you are guaranteed to never beat the market after fees. Why choose an investment strategy that will forever produce mediocre returns?It is true that an index fund cannot beat the market it’s tracking. It must, by design, produce average market returns. And once you subtract the small fee, your net return drops slightly below the market average. If you have an index fund that tracks the S&P 500 and carries a 0.5% fee, you are guaranteed to trail the market by half a percentage point every year.That sounds ugly until you consider the alternative. With an actively managed fund that carries a management fee of 2.5%, you would have to beat the market by an average of 2% every year to match the performance of the index fund after costs. Some years you may accomplish that. But over the long term, the feat is extremely unlikely, and the vast majority of funds fail to do so.When people argue that index funds are doomed to deliver below-average returns, they are playing games with what “average” refers to. In this case, it refers to the overall market average, not the average return of comparable mutual funds. As we’ve seen, most active funds produce returns that are below market averages. So while it’s true that index funds will produce returns that are a hair below the market average, they will still do better than the average actively managed fund.If you are considering buying an index fund that tracks the S&P 500, compare its long-term performance to actively managed funds that invest in U.S. large cap stocks. Over any significant time period, the index fund will beat the majority of these funds. In many cases the index fund will rank in the top 25%. In other words, there is nothing “average” or “mediocre” about index funds when compared with the alternatives.

    http://www.moneysense.ca/2009/02/01/...-couch-potato/

  8. #8
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    Here is an article posted by the Toronto Star

    http://www.moneyville.ca/blog/post/1...resp-plan?bn=1

  9. #9
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    Absolutely go to a bank.
    You never know, it might be some Bernie Madoff or Jess Buchan running the joint.
    You don't wanna lose that money.

    Isn't CIBC still behind PC?

  10. #10
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    Definitely go with a bank. You don't have to bank with them to open an RESP. Someone will be gald to help!

  11. #11
    Financial Advisor ashedfc's Avatar
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    Quote Originally Posted by sunshine6100 View Post
    Absolutely go to a bank.
    You never know, it might be some Bernie Madoff or Jess Buchan running the joint.
    You don't wanna lose that money.

    Isn't CIBC still behind PC?
    I fully agree with the go to a bank suggestion..... but in reality, Bernie Madoff like people are sitting inside the bank, its they who cause the financial mess..

    But don't take the banks for granted: as CIBC was on the verge of bankruptcy in early 2009.
    All 5 big canadian banks got a massive bailout (free money) just to survive. Who knows what will happen next time when such a disaster strikes again..

    CIBC is surviving today only because of the lifeline which was thrown at them.
    Here is the total $114 billion of bailout given to big 5 canadian banks

    The CMHC bailout is still in effect..

    Auto industry gets 15 (odd) billion & everyone makes a big issue; & big 5 banks get $114 billions & no one even knows about it.. (its kept top secret)..

  12. #12
    Smart Canuck kris10's Avatar
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    that is ridiculous!! i am with td and they charge me nothing for a education savings plan. TD by far is not the best bank but i just won't close my account because my daughters resp is in there,other then that, i am with ing direct all the way. But i have a chequing account,got the cheapest one and am sure to keep 1000 in there just so the bank fee is waived.

    is heritage education the one that offers the free pampers coupons when you sign up? i forget what bank it was called but i thought about it and decided there had to be some sort of catch!Glad i didn't.
    Last edited by kris10; Fri, Jun 8th, 2012 at 09:21 PM.
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  13. #13
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    Definitely go with a bank.



  14. #14
    Financial Advisor ashedfc's Avatar
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    Where ever you go, make sure the quality of investment is good. End of the day, it's the investment performance which matters (where the account is registered is not important)

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