Setting up a RESP

[Sylvanfan]

So having recently had my first child about 2 months ago, the government does give you the odd "rebate" to use for child care. I figured I would take this money and put it towards a college fund of some type. As you all know, I'm doomed due to my poor spending habits to have much of a future....so perhaps I should try and let the kid learn from his Dads horrific saving and spending habits.

The kid already has his own Social Insurance number. Now I remember hearing that a RESP wasn't neccessarily the best thing to do since I believe any money put towards that comes off your maximum RRSP contribution allowance. Since the basic personal claim is as high as it is, you were just as well to buy any investments in your kids name. Although truth be told at my pee poor income level, I'm not going to be putting $18,500 into RRSP's annually anytime soon and for the $1200 or so a year I'd put in over the next 18 years...I don't think missing out on $20,000 grand in unused RRSP contributions in the future is going to save me from having to work those extra 10 years.

Anyone else set up a RESP or education savings plan for their kids, and any tips?

[albertGQ]

RESP contributions do not affect your RRSP contribution limit whatsoever. PM Slava and he'll help you out. I believe he's in Mexico right now so his reply might be delayed

[Finny61]

I set up RESP accounts for my two kids, I don't have an immense understanding of the financial world however it was a straight forward easy process. I don`t know what is the ideal per say to contribute. The government kicks in a grant of $500 I believe when you register the little one on RESP, at least that`s what we got. And then they also do matching depending on your contributions (%) if I am not mistaken. I`d have to break out all my papers again.

You can certainly use the $100 child benefit cheque the gov't cuts you every month but keep in mind come tax time you'll be paying back on it as it is taxable, I believe they wanted $250 back so if you always are tight at tax time you might want to save a portion for the tax man.

And yeah RRSP is a different beast, don`t relate the two.

[MoneyGuy]

I'm a financial plannner and a CFP and can answer questions. When he returns, contact Slava and he'll set you up. I'm not in Calgary.

The info provided so far is correct. This has nothing to do with your RRSP, except for the chance much later that unused RESP money might be transferred into an RRSP. If you're looking at a small RESP, there are some fund options that will give you good diversification without having to buy five funds for contributions of $200 a month, for example. In addition to the federal grant, the Alberta has two small learning bonds. You can set up an individual plan now and turn it into a family plan later should another child come along. The family plan has the advantage of allowing you to easily designate RESP funds to different children. If grandparents want to give money to grandkids, maybe speak to them about contributing to the RESP. I have well-off clients who are totally funding their grandkids' education. There is no annual limit anymore, except for the lifetime limit. I've never seen anyone ever reach the lifetime max anyway.

Do not buy into one of the scholarship plans. When they tell you their great rates of return, don't believe it. Many people surrender their gains back into the plan, which inflates their returns. I once had a client who agreed to pay about $6,000 in fees to get out of one of those plans. She just wanted out.

I love the RESP concept but the money must be used for education. Unlike in-trust money, these funds do not actually belong to the child, a distinction that can be important.

It is, as had been pointed out, free money. There are some tips for withdrawing funds that won't be important to you until much later.

Similar to the RESP, you can go back and capture unused contribution room later. However, avoid the temptation. I advise that you do an education savings plan so you have an idea of what education will cost, how much you expect to have, etc.

Some links for more info.

http://www.milliondollarjourney.com/...-plan-resp.htm
http://www.hrsdc.gc.ca/eng/learning/...lic/resp.shtml
http://www.hrsdc.gc.ca/eng/learning/...lic/resp.shtml

[JustAnotherGuy]

I put $125 a month into my daughter's RESP. The government throws in $25 per month. For the year I contribute 1500 and there is a total of 1800 deposited. A pretty sweet deal.

If she does not go to university which I doubt will happen then I do not lose all of the money. I lose what the government contributed.

To me it is a no brainer decision. But I also think that each person should do what is best for them. So if you think you can make more money by doing a trust or managing your own money then go for it.

[Jimmy Stang]

I'm going to bump this thread as opposed to starting another. I need to set up an RESP now as well, and I am trying to decide between setting one up through a bank, a financial advisor, or through a self-directed sort of thing.

Primarily, I'm looking to avoid fees. I do my daily banking with PC Financial, with a little bit of savings at ING Direct, with some modest stocks and funds through Questrade, etc. So I like the self-directed idea, obviously. That being said, I'm not opposed to walking into a bank and setting one up there, but I haven't had a need for a branch in years. CIBC also said that I would need an account there in order to have an RESP there, which isn't something I'm interested in. And finally, I suppose that one of these days I should talk to a proper financial advisor about my "goals" and all of that fun stuff, but at the moment I am only interested in getting the thing set up as easily and efficiently as possible with no strings attached to other products, obligations, fees, etc.

Does anyone have any experience with Questrade (or a similar online brokerage) for an RESP? Can anyone talk me into seeing a bank/advisor?

[Slava]

Well I'm an advisor (and mentioned in this thread a couple of times). I won't give you the hard sell on why you should use me or any other advisor (although I obviously think you should).

Aside from what others have mentioned there are a few points for RESPs you should be aware of. First, you want to apply for all of the grants. Sounds silly, but there are a few institutions that don't apply for the provincial grants. I guess they don't want to do the admin in those cases, but regardless its free money and you want it! Second as far as fees there are none on RESPs through any advisors that I'm aware of. Some accounts do charge annual fees for registrations and such if you're below a certain dollar value, bjt RESPs are largely exempt (they are through me).

Feel free to PM me or ask in the thread and I can answer any questions you might have.

[MoneyGuy]

Originally Posted by Jimmy Stang

I'm going to bump this thread as opposed to starting another. I need to set up an RESP now as well, and I am trying to decide between setting one up through a bank, a financial advisor, or through a self-directed sort of thing.

Primarily, I'm looking to avoid fees. I do my daily banking with PC Financial, with a little bit of savings at ING Direct, with some modest stocks and funds through Questrade, etc. So I like the self-directed idea, obviously. That being said, I'm not opposed to walking into a bank and setting one up there, but I haven't had a need for a branch in years. CIBC also said that I would need an account there in order to have an RESP there, which isn't something I'm interested in. And finally, I suppose that one of these days I should talk to a proper financial advisor about my "goals" and all of that fun stuff, but at the moment I am only interested in getting the thing set up as easily and efficiently as possible with no strings attached to other products, obligations, fees, etc.

Does anyone have any experience with Questrade (or a similar online brokerage) for an RESP? Can anyone talk me into seeing a bank/advisor?

I'm not trying to get business here because I don'[t want RESPs from new clients who are a distance from me that I can't easily service. YOu could go really cheap and use something like ING or Questrade but you'll get no advice and you probably don't have a high level of understanding to be able to manage this on your own.

I suggest you send Slava PM and he'll get back to you when he returns. He'll do it right. No, he doesn't pay me for this, but you might suggest it.

Please avoid the banks. Slava = way better option. He can hit the thanks button when he returns.

edit: thanked already. That was fast. Slava must be back or he has a computer in one hand and a fancy bevy in the other.

[CarlW]

Originally Posted by Jimmy Stang

I'm going to bump this thread as opposed to starting another. I need to set up an RESP now as well, and I am trying to decide between setting one up through a bank, a financial advisor, or through a self-directed sort of thing.

Primarily, I'm looking to avoid fees. I do my daily banking with PC Financial, with a little bit of savings at ING Direct, with some modest stocks and funds through Questrade, etc. So I like the self-directed idea, obviously. That being said, I'm not opposed to walking into a bank and setting one up there, but I haven't had a need for a branch in years. CIBC also said that I would need an account there in order to have an RESP there, which isn't something I'm interested in. And finally, I suppose that one of these days I should talk to a proper financial advisor about my "goals" and all of that fun stuff, but at the moment I am only interested in getting the thing set up as easily and efficiently as possible with no strings attached to other products, obligations, fees, etc.

Does anyone have any experience with Questrade (or a similar online brokerage) for an RESP? Can anyone talk me into seeing a bank/advisor?

If you do get an RESP through an Advisor into mutual or segregated funds, please make sure to triple check that they are "No Load" if you are doing monthly contributions so that you don't get dinged with deferred sales charges when they have to withdraw for education. I've seen clients that had RESPs with others and then we find out it was sold with sales charges, even though it might only be around 1 or 2 percent of the withdrawal, I don't believe in losing a single dollar in sales charges on something like an RESP.

[Ryan Coke]

I know many places charge a fee to set up an resp. I ended up going to TD for this reason. They were very helpful tough.

[Ryan Coke]

Of course maybe I should've gone through Slava in the first place

[CarlW]

Originally Posted by Slava

Second as far as fees there are none on RESPs through any advisors that I'm aware of. Some accounts do charge annual fees for registrations and such if you're below a certain dollar value, bjt RESPs are largely exempt (they are through me).

Maybe not front loaded fees, but i've seen a few do a darn DSC or low load on clients that are doing monthly contributions thus creating charges upon withdrawal years later.

[MoneyGuy]

Originally Posted by CarlW

If you do get an RESP through an Advisor into mutual or segregated funds, please make sure to triple check that they are "No Load" if you are doing monthly contributions so that you don't get dinged with deferred sales charges when they have to withdraw for education. I've seen clients that had RESPs with others and then we find out it was sold with sales charges, even though it might only be around 1 or 2 percent of the withdrawal, I don't believe in losing a single dollar in sales charges on something like an RESP.

A reputable advisor won't put short-term money in DSC. Long-term money fine, but as the timeline approaches, that needs to be adjusted. That needs to be considered in conjuntion with various factors. And I'd avoid segregated funds for this.

[Jimmy Stang]

But then I'd have to meet a fellow CP'er in person. Weird.

You both make good points. I'll get in touch with Slava (not today as I'm hitting the highway shortly, but soon!) and set something up. My main prerequisites are quick, cheap, and easy, and he can probably provide all of the above!

[Slava]

Originally Posted by CarlW

If you do get an RESP through an Advisor into mutual or segregated funds, please make sure to triple check that they are "No Load" if you are doing monthly contributions so that you don't get dinged with deferred sales charges when they have to withdraw for education. I've seen clients that had RESPs with others and then we find out it was sold with sales charges, even though it might only be around 1 or 2 percent of the withdrawal, I don't believe in losing a single dollar in sales charges on something like an RESP.

Originally Posted by CarlW

Maybe not front loaded fees, but i've seen a few do a darn DSC or low load on clients that are doing monthly contributions thus creating charges upon withdrawal years later.

I was referring to account fees and things like annual fees. I completely understand your point on DSC charges, and agree. Things like those fees or fees to trade stocks though are a different animal; they're dependent on the investment and how its structured.

Originally Posted by Ryan Coke

I know many places charge a fee to set up an resp. I ended up going to TD for this reason. They were very helpful tough.

I can't say I'm surprised because there is a lot of paperwork if its done properly. Would you say where though, just for my own info? Thats the first I've heard of that practice.

[MoneyGuy]

Point about DSCs: If you go to a good advisor and expect him to set up an RESP and (edit) not be paid, that's nuts. Unless you're a client and have other accounts there. If the kids are very young, make good decisions and you'll be fine, then as the timeline gets short (less than seven or eight years) review it with the advisor and adjust. A client-centred advisor will accommodate that short timeline. Yes, you can get this free from the banks, but remember the part about a good advisor.... You can fine good advisors at banks, but your product selection is slim and the good advisors are not always the ones you get.

I have heard of RESP fees like the old RRSP trustee fees that hit the ditch years ago.

[macker]

1. Get SIN # http://www.servicecanada.gc.ca/cgi-b...nas2120&ln=eng

2. Get CESG application form :
http://www.servicecanada.gc.ca/eng/goc/cesg.shtml

3. Check out this site for more information :
http://www.canlearn.ca/eng/index.shtml

4. Program into your phone/calender the dates that you need to apply for the ACES grant. Take what you can get....
http://www.albertacentennial.ca/

5. Stay away from Pooled RESP providers, and or, advisors who are "big shots" and dabble in RESPs but don't see them as significant enough part of their business to take them seriously. Out of a households portfolio this is often the most active area of investment and there is obviously a shorter time horizon then most investments. Fees matter! Watch the MER's and with pooled RESPs there are layers and layers of fees. Also with some advisors there are DSCs and trailer fees and load fees to be aware of. If you don't want to do it yourself and set up a self-directed account then find a specialist in RESPs and not a generalist. Most people hate the banks but the banks tend to go into a space and then own it as they have the resources. This has been a postive thing in general as now companies like AGF and CI have been forced to lower their fees to try to stay competitive. I don't think you can go wrong with RBC or TD as they both have decent offerings and don't use DSCs that I am aware of? Putting your RESP in cash and just banking the 20% CESG would have likely beaten most mutual funds in the past 5 years and I am not convinced the next 5 years will be any better. Watch fees and play safe.

[Slava]

I can't recall on TD, but I just transferred an account from RBC that was loaded with DSCs. The banks are no better in this regard I would say.

On another note though, the DSC gets a bad rap. Its not an extra fee for most people, though its branded as one; its only an extra fee if you sell and frankly with an RESP that is a rarity for sure. I can see the objection on TFSAs or non-registered investments but for long term investments its most often a non-concern. I don't use the DSC for RESPs in the vast majority of cases, but I also can see why advisors should. For clients there are cases where the DSC is actually good for them; it keeps them invested where they might otherwise bail at the worst possible time.

[freedogger]

I'm going to move to Quebec when they turn twelve, education is practically free there.

[macker]

http://www.canadianfundwatch.com/files/dsc.pdf Old but still explains more about DSCs. The Golden Handcuff....


Regarding RBC : although they offer DSC it isn't commonly used.
https://www6.royalbank.com/education...ual-funds.html
Things are properly disclosed and you have the choice.



RBC is a leader when it comes to offering a lower fee option for Canadian investors :
https://www.rbcdirectinvesting.com/R...esd/index.html