RESPs (from me or another financial institution) vs Group RESPs (i.e. Cdn Scholarship Trust Fund)
If you have an RESP with one of these scholarship trust funds, I will say one word - RUN.
I just had a client in my office who told me that they have this account and I have proposed the better option of opening an RESP with me. Then this morning I ran across this article that highlights all the reasons why you should RUN from this plan. Before one of their sales reps ropes you in or even during (to a certain degree), just RUN.
Years ago, I did some investigation into another group RESP plan like the one in the title of this blog. I can't remember the name of that one now but after reading the 125 page prospectus and all the fine print, I was convinced that these types of plans were not in the best interest of the clients. This article confirms this information. You lose your flexibility with the plan mainly because the fees are high, and you have certain times and limits that the beneficiary has to meet before you're able to get any funds out of it for education. That is not the case with an RESP with me and any of the mutual fund providers I work with.
Saving for your children or grandchildren's education can be stressful enough, let alone worrying about if and when you're going to be able to get all your funds out when you need them. Education just so happens to be the most inflationary expense out there. You certainly do not want a company dictating to you how you are going to spend those funds when your child needs them or charging you fees to get YOUR money out.
RUN - I can't stress this enough. If you are investing in one of these group RESPs, let's have a conversation and I can help get your education fund on the right track.
Tips about RESPs:
- $2500 / year can be contributed for each year of age
- you can catch up on contributions
- the crossover point for a beneficiary/child is age 10 - this means that if you haven't started an RESP for your child or grandchild yet, this age allows you to maximize on your yearly contributions until the child is 17
- you get a minimum of 20% from the government on your contributions
If you have other questions, let me know!