Government assisted education fund

[mike rousseau]

I remember hearing about an education fund where the government matches a portion of the money put into the account... RESP?

 

I was wondering if anyone has any info or is using this set up...

 

My dad wants to fund an education savings plan for my son and I'd like to get it started..

 

Thanks

 

Mike

[Grimace]

The institution you set this up with will figure out the government's end on the subject and take care of getting them to put it out. We use USC. I believe it has now changed the name to Knowledge First. It is a registered education savings plan. RESP. These folks are the way to go because instead of a bank stashing the profits from your investment, these folks are a non-profit organization that floods the profits back into the collective pool. All money made from the investments goes back to the kids in that particular year class. USC or Knowledge First as they are now called does the work on the government end (as would any bank I am sure). I will PM you some info.

 

Hope this helps.

[Tdel]

Here is a link with the info you are looking for.

 

Education Savings For A Child

 

Tom

[wantabigone]

you can contribute up to 2500 a year until the child is 16 and receive the government contribution.

If you have started late (i.e. your child is 5) you can double up your payments until you have caught up on your maximum contribution. So.. you can contribute 5000 a year for 5 more years and then only put in 2500 a year after that until he is 16 getting the govt contribution.

The government will contribute 20% of what you do. So if you put in 2500 the gov't will put up 500.

You can have multiple people contribute to your child's RESP keeping into mind that the maximum still cannot exceed 2500.

You do NOT get a tax break- the money going in is after tax dollars.

You can have access to the money if an emergency comes up with no penalty and you keep the capital gains that have accrued. However the govt money must be returned.

The current maximum contribution is 50000.

It is best to speak with a bank RESP specialist to get specific questions answered accurately.

 

I hope this gives you some information you did not know before.

[mike rousseau]

Thanks a lot everyone...

[torco]

I just recently opened one for our daughter. They are a great tool for saving for your sons future education. There are alot of options and places out there to invest your money. You should definitely do your research before selecting your plan or investment strategy as some can be more restrictive or provide less than reasonable returns after fees. This guy has a lot of good advice for setting an RESP for the first time.

 

http://www.moneysmartsblog.com/

 

I ended up using an RBC mutual fund for now as I build up the investment, eventually I will go self directed so I can reduce Management Fees. I stayed away from the pooled plans for the following reasons: tend to have high fees, strict contribution schedules, high penalties if you ever want to switch out later.

 

That said they are easy and can provide a reasonable rate of return.

[bubbles]

Good Tip - open a FAMILY one, not one in you sons name, anyone in the family can use the money for education. You never know what is going to happen in 18 years.

[spooner_jr]

 

You can have access to the money if an emergency comes up with no penalty and you keep the capital gains that have accrued. However the govt money must be returned.

 

I hope this gives you some information you did not know before.

You can keep the gain, but either have to roll it into your RRSP without getting a tax credit, or keep it and pay tax on it as income.

[aplumma]

IT looks like the Government is adding 12% and it is locked into being used for education only. Check into bonds and other investment vehicles before committing to this. The advantage is if your son decides he wants to be a tradesman and open a business you can use the money to help him become an owner with the funds. It also can be used for an emergency or some other life altering event. I don't know the rules of the government plan and they may have these provisions built in. Look at all of the options is all I am suggesting.

 

 

Art

[Roy]

I know it's going to sound flippant but knowing what I know today, I'd buy 3-4 ounces of gold. In 15 years, his university or/and whatever else will be paid for.

[pics]

Make sure you do a little research on several different ones. We went with Canadian Scholarship Trust before we knew better. I wouldn't advise anyone to go with these guys. I'm not sure if they still have brochures in the hospital now but they did when my daughter was born. Kind of like a tow truck driver handing out cards for a lawyer or body shop at an accident scene ..preying on your emotions with an inferior product....

[irishfield]

I know it's going to sound flippant but knowing what I know today, I'd buy 3-4 ounces of gold. In 15 years, his university or/and whatever else will be paid for.

 

[12footspringbok]

I know it's going to sound flippant but knowing what I know today, I'd buy 3-4 ounces of gold. In 15 years, his university or/and whatever else will be paid for.

 

Just what exactly is it that you know today that makes gold a good investment?

[Grimace]

The price of gold has exploded in the last 10 years. Really exploded. When the economy goes to crap, gold and silver go through the roof.

[spooner_jr]

The price of gold has exploded in the last 10 years. Really exploded. When the economy goes to crap, gold and silver go through the roof.

 

The worst time to buy anything is when the value is through the roof; sooner or later it goes back to the basement.

[Grimace]

I know. I think Roy was referring to the fact that if he bought it back then he would be groovin. Or maybe he was implying that the economy will get even worse and gold will be worth about 20 large for an ounce. Lol.

 

Edit: Typo

Edited January 14, 2012 by Grimace

[kickingfrog]

Buy high, sell low, that's the way to go.

 

This is money for future education not a hedge against the market.

 

Sure that "safety" cuts into ROI but this isn't Vegas.

 

Only gamble with money you can afford to lose, and this is not something most of us can afford to gamble on.

[Grimace]

Yup. That's why I am investing in an RESP. Now the little brat better use it or I will have a nervous break down and buy a Corvette. :-)

[kickingfrog]

And a little bit a month doesn't hurt as much. And now the cash can be used for trades and not just universities or colleges.

[bigbuck]

Buy an RESP through a Financial Advisor or thru your bank. Use a well diversified balanced fund (stocks AND bonds) and set up a monthly plan. That way you are dollar cost averaging and if the market tanks along the way, better for you, the market is on special when it tanks. For every seller, someone is buying. Patience and intestinal fortitude is the name of the game when it comes to investing. Roy mentioned gold, its interesting and will probably continue to rise for a while but at some point will begin to fall. I wouldn't bet the farm at this point on precious metals. That said, 10-20 percent of a portfolio is ok. More than that, you are rolling the dice. Don't play with education funds, its your child's future. The reason I said to buy thru the bank or an advisor is this, a lot of the trusts out there are OK if your child goes to school and if life doesn't get in the way. I have had clients have to cash out early to pay the bills due to job loss, no problem. With the trusts, they are heavily front end loaded and you will lose a huge chunk if you cash out early (as much if not more as the first years contribution). Buyer beware. Another thing, most post secondary education qualifies for the grant, your child could go to university or hairdressing school, its pretty flexible.

Edited January 15, 2012 by bigbuck

[mike rousseau]

This is great... Thanks everyone