What are you doing to save for kids education - RESP, anything else?

[darklord700]

I told my kid that $2500 plus $500 grant a year for 18 years is all he's going to get. If that's not enough, he's on his own to take out student loan.

[BigNumbers]

Originally Posted by darklord700

I told my kid that $2500 plus $500 grant a year for 18 years is all he's going to get. If that's not enough, he's on his own to take out student loan.

[hayduke's dad]

I have 3 kids. I have put away the same amount of money per kid per month since they were born. I was advised to put all 3 on the same account. That way if one doesn't go to school the other 2 get to have at it without being penalized.

[Schraderbrau]

We put 100 per child per month right now into the heritage fund. But from what I have seen they might not be smart enough to need it. Which is ok. For every doctor out there u have 10 ditch diggers......

[kl83]

We are planning to put $2500 a year (208.33/month) into this plan. Am little biased since I sell the product. Main advantage is education bonus of up to 15% of the contributions to the RESP will increase the income paid as Educational Assistance Payments (EAPs) to go along with any the fund and any growth plus the grants.

http://www.inalco.com/pdf/particuliers/13-441A.pdf

[temple5]

I just found out my buddy who also just had a kid signed up for CST a few months ago.

Has anyone tried to leave the plan that early, what are the penalties hoops for something like that.

[nfotiu]

How much is Canadian tuition these days. I wonder if the difference is as great as everyone says it is. The big Virginia state schools (UVA, Virginia Tech, VCU,etc), which are good schools, are in the $9,000-$11,000 for in-state tuition.

Maybe I am just naive about how much that will all cost, I put a little away every year, but just plan on paying it at the time. Does it really end up costing much more than what I am used to paying for kids now? When they were in pre-school, it was more thant $10k a year each. Now, it seems their sports are costing close to that. Seems like college years wouldn't be significantly more expensive than their years growing up.

[gasman]

Originally Posted by V

We have an RESP setup for our first kid, but have regretted it for quite some time. Haven't set anything up for the other 3.

My investments do much better than the RESP has performed, and we don't really miss the extra 500 bucks the gov't throws in. Honestly, I don't even know if I'm going to pay for my kid's tuition. It's so cheap here, and it really hasn't risen that much in the 13 years I've been out of school. I don't see university being prohibitively expensive 15 years from now, regardless of what those salesmen would like to tell you.

This is one of the most ridiculous things I have ever heard... Putting the money in an RESP is a GUARANTEED 20% immediate return, as the government matches. $500/year over 18 years is $9,000 before accumulated interest/dividends/capital gain (likey over $12,000 @ 4%)

Most financial instituitions have the option of starting a self directed RESP which would mean that you can invest in anything you could outside of the RESP, stocks, bonds, ETF's, Mutual Funds. etc.

To say something like "my investments do much better" is laughable, as you could just put those same investements inside of an RESP and defer any tax on your earnings for 18years (earning interest/dividends/capital gain on the defered tax)

As for your other comment about Tuition not changing.
since 2002. From 2006 to now the cost of tuition in Engineering at the UofA has risen at an annualized rate of about 6%. In 2006 Tuition and fees was $5673 and in 2014 $8742 Source: University of Alberta data book. Extending this out 18 years from now...about $25,000/year for tuition and fees.

It's your choice to invest inside of an RESP or not. but the reasons you state above make don't support your decision.

[Slava]

Originally Posted by kl83

We are planning to put $2500 a year (208.33/month) into this plan. Am little biased since I sell the product. Main advantage is education bonus of up to 15% of the contributions to the RESP will increase the income paid as Educational Assistance Payments (EAPs) to go along with any the fund and any growth plus the grants.

http://www.inalco.com/pdf/particuliers/13-441A.pdf

I flipped through the PDF, but I am curious, how does the "up to 15%" bonus work? I didn't catch what that is based on.

[gasman]

Originally Posted by V

Well, I make about 30% on tax money coming back, so yeah.

You do know that this is just deferred tax right... you will still have to pay income tax when you take out of your RRSP. the difference, assuming you live above the poverty line when you retire will amount to 7% savings on your investment + earnings...

[SeeGeeWhy]

Originally Posted by redforever

We have a private company set up with our kids as shareholders.

When they were university bound, we issued them dividends to cover their needs while attending university. They had jobs when university was not in session.

That's clever, thanks for the idea.

[2ArmBands]

If I'm sending my kids to post secondary I really hope they elect to study something that will translate into a good job. It seems to me 80% of post secondary degrees are pretty useless. Ultimately it is their decision but fingers crossed they choose Engineering, Nursing, or the obvious good post grad options.

Who knows if I'm really lucky they will take the skilled trade route and get paid for their education. Seems unlikely with 2 girls!

[kl83]

Originally Posted by Slava

I flipped through the PDF, but I am curious, how does the "up to 15%" bonus work? I didn't catch what that is based on.

Its based on what age you start the contributions, the younger the start age, the higher bonus.

[Coach]

Originally Posted by 2ArmBands

If I'm sending my kids to post secondary I really hope they elect to study something that will translate into a good job. It seems to me 80% of post secondary degrees are pretty useless. Ultimately it is their decision but fingers crossed they choose Engineering, Nursing, or the obvious good post grad options.

Who knows if I'm really lucky they will take the skilled trade route and get paid for their education. Seems unlikely with 2 girls!

Well even Fine Arts degrees can do that. It depends on what you consider a "good job". Gold can also be struck in those types of fields.

[bizaro86]

Originally Posted by kl83

Its based on what age you start the contributions, the younger the start age, the higher bonus.

I assume that money is coming out of the fees for trusteeship/investment management?

I always want to run whenever I see long financial documents with no mention of what level of fees are being charged. When the fees are embedded right into the product with low disclosure, that doesn't usually indicate that they're really low to save you money...

[kl83]

Originally Posted by bizaro86

I assume that money is coming out of the fees for trusteeship/investment management?

I always want to run whenever I see long financial documents with no mention of what level of fees are being charged. When the fees are embedded right into the product with low disclosure, that doesn't usually indicate that they're really low to save you money...

There is an MER of 3.5% as part of the investment fund but no admin fees otherwise. The document was just a general overview brochure. More details available if required.

[yyjvisitor]

Quote:
Originally Posted by yyjvisitor
Is a Lump Sum or Annual Contributions Better for an RESP?We decided to lump sum $30000 the first year and contribute $2500 yearly until we reach the maximal contribution amount.


Assuming you don't have six kids, you won't receive all of the grants with that kind of lump sum. As far as I know (unless it's been changed) the maximum grant is $1000 per year, per child.


Our son is 6 mo old and I would rather get the compounding interest of the $30K over the next 17 years and give up some of the grant money.

[Slava]

Originally Posted by kl83

Its based on what age you start the contributions, the younger the start age, the higher bonus.

And do you have to contribute for the full time (all 18 years for example) to get the bonus?

Originally Posted by kl83

There is an MER of 3.5% as part of the investment fund but no admin fees otherwise. The document was just a general overview brochure. More details available if required.

Whoa. 3.5%!? Thats brutal.

[Slava]

Originally Posted by yyjvisitor

Quote:
Originally Posted by yyjvisitor
Is a Lump Sum or Annual Contributions Better for an RESP?We decided to lump sum $30000 the first year and contribute $2500 yearly until we reach the maximal contribution amount.


Assuming you don't have six kids, you won't receive all of the grants with that kind of lump sum. As far as I know (unless it's been changed) the maximum grant is $1000 per year, per child.


Our son is 6 mo old and I would rather get the compounding interest of the $30K over the next 17 years and give up some of the grant money.

Well you could invest the $27,500 and then move it in gradually to get all the grants over the coming years. That would give you the same compounded return, but more grant money.

[kl83]

Originally Posted by Slava

And do you have to contribute for the full time (all 18 years for example) to get the bonus?

Yes.

Whoa. 3.5%!? Thats brutal.

It is a bit high, but if you start early enough, the bonus offsets that. I know there is other options with lower MER.

I am bit biased but I do realize there is other options so just depends on what your after.