User Tag List

Results 1 to 7 of 7
Like Tree15Likes
  • 2 Post By Purdee
  • 2 Post By flemeth
  • 2 Post By lizzie bargain
  • 1 Post By Ciel
  • 1 Post By Shwa Girl
  • 4 Post By dagney
  • 3 Post By brunt

Thread: Your opinions on RESP: GIC vs Mutual Funds

  1. #1
    Smart Canuck Purdee's Avatar
    Join Date
    Dec 2008
    Location
    Alberta
    Posts
    3,429
    Likes Received
    6857
    Trading Score
    123 (100%)




    1
    Hello all, I recently visited my local TD bank and needless to say the financial advisor I met with confused me with her colorful charts and graphs that she didn't even know how to read. Anyway, I wanted to open a RESP for my daughter who is 2.5 years old with a $50 deposit every 2 weeks and the flexibility to deposit more whenever I can. My goals were to put away a little on a set schedule and take advantage of the government contribution. I thought there was only 1 type of RESP, but the financial advisor said there is the mutual fund (10% return) which I'd make more money in the long run and the GIC which is very low like 3.5%. I was afraid of losing my principles and went with GIC since it's a guaranteed type of investment.
    Thoughts? If you currently have RESP, which one and why?
    Thank you.
    This thread is currently associated with: N/A
    Ciel and Shwa Girl like this.


  2. #2
    Canadian Genius
    Join Date
    Nov 2014
    Location
    Ontario
    Posts
    6,888
    Likes Received
    17003
    Trading Score
    56 (100%)




    I do have RESP for both my girls and I found that it was amazing when it was time for them to go to university . Still have a DD who is entering her 2nd year. I didnít go with a bank. I did mine with Knoweldge Finiancial and contributed into a family group plan which was my understanding at that time would make more interest. But mine was a fixed amount every month. I also did lump some whenever I have a little saved up . There is a lot of info on there website if you look it up. Hope this helps
    Purdee and Ciel like this.

  3. #3
    Smart Canuck
    Join Date
    Dec 2009
    Location
    Calgary
    Posts
    2,835
    Likes Received
    15460
    Trading Score
    1 (100%)




    I did mostly GIC-I am like you and not wanting to risk my principle-even though perhaps I could get more long term I did not want the risk-my reasoning was since I was already getting a 20% grant from the govt the GIC interest in addition would be enough. DD is now starting second year and we had plenty saved-mind you we did put in the max 50,000 even though not all of that received the grant.
    Purdee and Ciel like this.

  4. #4
    Dancing bean paste bun Ciel's Avatar
    Join Date
    Jul 2009
    Location
    Ontario
    Posts
    14,815
    Likes Received
    20056
    Trading Score
    12 (100%)




    Did spot this week an article about how a parent can go about getting the RESP money for their scholar child -it requires advance notice to the plan:
    https://www.thestar.com/life/advice/...lars-resp.html

    You may also find this page of definitions from the CRA on RESPs useful:
    https://www.canada.ca/en/revenue-age...ns.html#family
    Purdee likes this.
    2019 #Gold

  5. #5
    We.The.North.We.The.Champ Shwa Girl's Avatar
    Join Date
    Dec 2010
    Location
    Ontario
    Posts
    22,675
    Likes Received
    37330
    Trading Score
    7 (100%)




    There is a book that you can get at your public library called The RESP Book by Mike Holman
    One strategy he mirrors is investing like The Canadian Couch Potato portfolio#2
    https://canadiancouchpotato.com/model-portfolios/
    Last edited by Shwa Girl; Sun, Sep 2nd, 2018 at 10:18 AM.
    Ciel likes this.

  6. #6
    Junior Canuck
    Join Date
    Nov 2008
    Posts
    503
    Likes Received
    1501
    Trading Score
    1 (100%)




    With inflation running just under 2% and the GIC paying 3.5% deduct fees etc., not the greatest investment. The 20% government top up is a bonus.
    Do not go with bank mutual funds if you can possibility escape them because of Expensive management fees.
    Lots of low cost mutual funds and EFTís out there that track the market.
    Read, read, read.
    Do not go with bank advice - they are maximizing their profits not yours.
    ROMEO, endi2000, Ciel and 1 others like this.

  7. #7
    tightwad and proud of it! brunt's Avatar
    Join Date
    May 2009
    Posts
    511
    Likes Received
    532
    Trading Score
    0 (0%)



    I second dagney's advice, but will add the following:
    • An RESP in a GIC is always better than no RESP at all just due to the government match.
    • GIC vs mutual fund is a tossup, sometimes better one way, sometimes better the other. But watch for the mutual fund fees - there are plenty of 'em, and they are high. And for no good reason, other than that people just pay them.
    • Low cost ETFs will be the best of the bunch. It is not really that difficult, but it is a hurdle with which many have trouble. For instance, banks are now paying dividends in the 4-5% range, which beats GICs by a mile.


    So doing something is better than nothing. Doing ETFs is better than GICs if you can stomach it (it's not difficult, but you should consider whether or not you have the temperament before you make the leap).
    Purdee, Ciel and dededi like this.

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •