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Old 08-01-2018, 12:51 PM   #1
Slava
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Default Scholarship RESP Plans (Heritage Trust/Knowledge First)

Unfortunately these plans are around and people who think that they've saved for post-secondary school for their kids are learning that the money is gone. I think a large part of this is consumer education, but realistically the documentation is probably lacking...

https://www.thestar.com/news/investi...-was-gone.html
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Old 08-01-2018, 01:07 PM   #2
pseudoreality
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I was worried for a second that you were going to be promoting/selling them. I think most mutual funds are a bad deal, but these trusts are outright criminal.
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Old 08-01-2018, 01:17 PM   #3
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I was worried for a second that you were going to be promoting/selling them. I think most mutual funds are a bad deal, but these trusts are outright criminal.
LOL, no and I wasn't sure how to make the thread title work out the best. I guess I could have used the title from the article.

The thing is you can have an RESP with no mutual funds or any managed products like that if you prefer.
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Old 08-01-2018, 04:54 PM   #4
Cameron Swift
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Well, ####! We started one of these with CST right after our son was born. Had no idea until now that it was a bit dodgy. Just spent the last hour reading online articles and comments and I'm pretty mad. I think these guys just called out of the blue right after my son was born and I see that's a common practice for them.


So, from what I'm reading the cons with these guys, you're not entitled to the money they promised if you miss a payment, pull out early, child doesn't go to to university, doesn't do a 4 year course, switches courses or takes a year out prior to university. I'll have to dig out the paperwork later to see what the fine print says on all this. Additionally, even then, you don't get your full payment back as they keep a big chunk of it for maintenance fees.


At this stage in the game, my son is 9, so we're halfway through. We've paid $100 a month since he was born. Our son will almost certainly be going to university (very intelligent kid) so I guess it doesn't make sense for us to pull out now. Maybe a dumb question, but is it possible to have two RESPs for a child? Thinking it might make sense to open a more stable one with a bank just in case we get screwed with CST.
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Old 08-01-2018, 04:59 PM   #5
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Originally Posted by Cameron Swift View Post
Well, ####! We started one of these with CST right after our son was born. Had no idea until now that it was a bit dodgy. Just spent the last hour reading online articles and comments and I'm pretty mad. I think these guys just called out of the blue right after my son was born and I see that's a common practice for them.


So, from what I'm reading the cons with these guys, you're not entitled to the money they promised if you miss a payment, pull out early, child doesn't go to to university, doesn't do a 4 year course, switches courses or takes a year out prior to university. I'll have to dig out the paperwork later to see what the fine print says on all this. Additionally, even then, you don't get your full payment back as they keep a big chunk of it for maintenance fees.


At this stage in the game, my son is 9, so we're halfway through. We've paid $100 a month since he was born. Our son will almost certainly be going to university (very intelligent kid) so I guess it doesn't make sense for us to pull out now. Maybe a dumb question, but is it possible to have two RESPs for a child? Thinking it might make sense to open a more stable one with a bank just in case we get screwed with CST.
You can have more than one RESP, but there is a finite grant and thatís all you get (if that makes sense?). There are a few other advantages such as tax sheltered growth and things like that which you would still get though.

Later (when I am not on my phone) I will post an RESP primer to go through a bunch of the considerations and things like that.
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Old 08-03-2018, 11:29 AM   #6
pseudoreality
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You can have more than one RESP, but there is a finite grant and thatís all you get (if that makes sense?). There are a few other advantages such as tax sheltered growth and things like that which you would still get though.

Later (when I am not on my phone) I will post an RESP primer to go through a bunch of the considerations and things like that.
Can you address the rules about the grant money and interest it earns in your primer? I've got an RESP with a big bad bank and they keep the grant money in a money market fund separate from the main mutual fund my contributions go into. That makes it easier if it has to be returned, but am I unnecessarily losing out on investment earnings potential? They also asked what school my kid might go to. I recall it being explained that if the kid doesn't go to school, the grant money is returned to the government and the interest the grant money earned goes to the school I initially identified. I can't seem to find much info online about this. It seems the people that go self-directed through a discount brokage link Quest Trade just see the grant money show up in their account as cash and then they redistribute it based on their chosen ETF allocation. I guess the math wouldn't be that hard if you don't contribute over the amount they match with the grant, it would just be 20% of the total.

And yes, I know I'm a hypocrite for having a mutual fund. It was the easiest thing to convince my wife of when we had our first. However, she is now totally onboard with self-directed investment through a discount brokage and I got her set-up for her TFSAs that way. We recently had another baby, so it is decision time. Do we double down on the bank mutual fund, which is the easiest and most expensive, or do I transfer it to a discount brokage and manage it myself for better returns/lower fees?
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Old 08-03-2018, 01:47 PM   #7
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Can you address the rules about the grant money and interest it earns in your primer? I've got an RESP with a big bad bank and they keep the grant money in a money market fund separate from the main mutual fund my contributions go into. That makes it easier if it has to be returned, but am I unnecessarily losing out on investment earnings potential? They also asked what school my kid might go to. I recall it being explained that if the kid doesn't go to school, the grant money is returned to the government and the interest the grant money earned goes to the school I initially identified. I can't seem to find much info online about this. It seems the people that go self-directed through a discount brokage link Quest Trade just see the grant money show up in their account as cash and then they redistribute it based on their chosen ETF allocation. I guess the math wouldn't be that hard if you don't contribute over the amount they match with the grant, it would just be 20% of the total.

And yes, I know I'm a hypocrite for having a mutual fund. It was the easiest thing to convince my wife of when we had our first. However, she is now totally onboard with self-directed investment through a discount brokage and I got her set-up for her TFSAs that way. We recently had another baby, so it is decision time. Do we double down on the bank mutual fund, which is the easiest and most expensive, or do I transfer it to a discount brokage and manage it myself for better returns/lower fees?
Yeah for sure, and I will go through the idea of a family RESP for you also. I got preoccupied with weather/politics for my CP time, which is embarrassing!
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