RESP experience?

[jennyjinx3]

Hi!

Just looking for others experiences with RESP's. Do you have them for your kids? Have you ended up using them yet? Any problems....any info is appreciated.

I do have a financial planner, but was hoping to hear some personal experiences.

 

[Gina-Gina-Bo-Bina]

We have one for our DS. He even contributes to it himself now that he has a part time job.

He will begin taking money from it next year (he begins grade 12 in September).

I work for two financial advisors, so we also sell them at work. We encourage all of our clients with children to open an RESP. The 20% grant is hard to pass up. That said, our DS will not get the grant after December 31st this year (it only applies to deposits made until the end of the year your child turns 17) so he will open a TFSA in January for the balance of his education savings.

 

[MedicGoofy]

My family has always done them as well. My brother just set one up for my niece. As well, we both had them growing up. They are definitely beneficial in saving for school, along with the added money the government throws in.

 

[sk8jdgca]

Just don't do the group scholarship kind- the fees are huge, you pay so much the first few years and if you want out it, you pay huge fees. Also check out the fine print. One that i looked at didn't pay out anything until the student finished the first year.

Also be careful of purchasing funds with a deferred service fee- those things don't mature for 7-8 years, so if you buy any after the child turns 10, you may have to pay fees to get your money back.

Look for a no load fee that targets a date- that way the investment gets more conservative as you approach the time the kid is ready for school

Also watch for annual account fees

 

[kuhltiffany]

Make sure that you get them through a bank or financial advisor, not through one of the "scholarship trust" type plans where they pool the money.

We have 2 kids, so we set up a family plan. That way if only 1 kid goes to post-secondary, they can use the total amount.

 

[TheBig2na]

I had one through one of the group plans that my parents set up. I got a lot of mloney out of it and have no complaints. I signed both of my kids up through them as well and the points above are valid about the fees being front loaded. If you ever wanted to get out of it after a couple of years you can put the plan on hold. I plan on staying in as I'm sure everyone does, and in the end my kids should have a good chunk of money for school.

Going through a financial advisor is fine as well. For my second child I looked at both options to see which paid more historically and the cost of fees. Banks and financial companies dont take their fees the same way, but they definitely take them. You just don't know about it. Either way banks, Scholarship Trusts, Financial Advisors, they all get paid, and so do you and your kids. 20% on your investment is pretty good from the government, plus whatever the fund does over the 17-18 years. It is a great idea for your kids if you can afford it. How you do it is a personal choice based on having all of the information you can. I had my financial advisor come in and had my Scholarship rep come in and asked them why they were better than the other and in the end I didn't see much difference over the long haul which is what everyone should be looking at. If you arent in a stable job than banks are probably better in the short term.

Contact a rep from each and see what works best for you.

 

[Scornelius]

The "problem" with the group plans is if you cancel them, miss payments or want to withdraw early, you're hit with a bunch of fees. But, if you stick with them, they can pay off very nicely. In part because you get a share of the money of all those people who have bailed out along the way. We have one that we only "have'' to put $50 a month in, because we know we will always be able to make that payment. We put in extra when we want, but never need to do more than $50 to keep it in good status. We started it when DS was only a few months old, and I'm very happy with it.

 

[jennyjinx3]

Thanks so much everyone! I appreciate all the input.

 

[Gina-Gina-Bo-Bina]

Here is a good article that discusses some of the differences between the scholarship type or group RESP's and their counterparts:

http://www.moneysmartsblog.com/group-pooled-scholarship-resp-plans-differences/

 

[wdwmike59]

Make sure that you get them through a bank or financial advisor, not through one of the "scholarship trust" type plans where they pool the money.

We have 2 kids, so we set up a family plan. That way if only 1 kid goes to post-secondary, they can use the total amount.

What they said! Do it through a bank and if you have multiple children, set up a family plan.

 

[dancin Disney style]

When my oldest DD started college I took her tuition bill into the bank showed it to them and they withdrew the money on the spot and put it in my bank account. It was very simple and easy. Even after that all I had to do was go in and ask to withdraw money to cover various expenses and it was done immediately.

 

[mamabear0222]

Make sure you look at the options should your child not choose post secondary.
Granted we'd all love for our kids to continue education, some just do not.

 

[dancin Disney style]

Make sure you look at the options should your child not choose post secondary.
Granted we'd all love for our kids to continue education, some just do not.

You keep your principal but you lose the government grant money.

 

[wdwmike59]

So the key to that, and your bank advisor can help with it, is to withdraw as much of the grant money and earnings first. Since it is taxable in the hands of the child, they will pay little to no tax, and then the remaining funds are available to you if your children don't need to use all of it.

 

[mamabear0222]

You keep your principal but you lose the government grant money.

You keep your principal but if not used for education, what amount is penalized to you?

 

[Gina-Gina-Bo-Bina]

You keep your principal but if not used for education, what amount is penalized to you?

No penalizing......your contributions are returned to you, tax free:

http://www.canlearn.ca/eng/saving/resp/money.shtml

Now, if you have invested in something with a fluctuating value (like a mutual fund) that has declined in price since your purchases were made, then you may be "out" a certain amount.

 

[dancin Disney style]

You keep your principal but if not used for education, what amount is penalized to you?

If it's not used for education the government takes back the 20% grant that they gave you. They may or may not also charge interest....that I have no idea of but it wouldn't surprise me.