Planning a RESP strategy is similar to planning your retirement (including RRSP)but your timeline is shorter and the adjustment happens much earlier and it may not be enough time to be aggressive depending on your risk appetite. I have now sold all my mutual funds from my RESP account and moved it all over to my discount broker – RBC Direct Investing.
Previous RESP Strategy (or Lack of a Strategy)
I had everything in a few mutual funds:
- 67% in a dividend income fund (Yeah, I was dividend focus from an early age just not in stocks)
- 20% in Canadian equity
- 13% in bond fund
The 8% yield I was getting out of the dividend income mutual fund was keeping me away from making major changes until now. Everything has now been transfered in my RBC Direct Investing account and I have been planning my strategy.
Planning a RESP Strategy
The timeline is critical as you don’t have 40 years like a retirement. I will repeat that the timeline is critical as you may not
Continue reading RESP Strategy
Deciding on funding an RESP is usually based on the desire to provide the best for your children through higher education. Banks or advisors will bring it forward and highlight the 20% contribution from the government in the form of a CESG grant and the tax free growth. They want you to buy their products. It’s not relevant to them where you put the money but if they can get you to open an account with a monthly contribution, that’s a monthly fee in their pocket. What I am referring here is to the advertisement that surround us and often promote products that might or might not be in our best interest.
In a previous RESP post (RESP Explained), I had a very good question from a reader about the drawbacks of a RESP. The drawback is only apparent when you consider what you will do with the money if your children don’t go to a post-secondary institution. When faced with a dilema in investing, it’s important to gather all the facts. RESP rules are clear and the process is defined which can allow for everyone to reach a conclusion
Continue reading RESP or No RESP?
RESP, or Registered Education Savings Plan, is an investment account used by parents to save for their children’s post-secondary education in Canada. There are many advantages for parents, as well as future students, for saving for college or university using RESPs, including access to the Canada Education Savings Grant. These plans are similar to the US Coverdell Savings Account or 529 Plans for those familiar with them. Here is what you need to know about using these accounts to save for your children’s education.
How RESP Works
A RESP is designed to be a post-secondary savings account used by parents to save for their children’s education. It provides a tax benefits and other education benefits for students once they are enrolled in a post-secondary program. Parents and others can contribute to the account and provide a savings for a student’s future education.
Any principal contributed to the account can be withdrawn at any time by its contributor. If the student (or beneficiary) decides not to attend college, any accumulated interest may be withdrawn by the contributor, after certain circumstances have been met (such as
Continue reading RESP Explained
Before I discuss the current RESP planning process I am going through, I would like to highlight to all my readers that I share all my stock trades through my newsletter. So far this year, I have done 4 trades starting with my annual January TFSA contribution.
Here are a couple of stock trade newsletters to give you an idea. I am always happy to tune the content, please let me know if there are more information on the trades you would like to see.
My intention is to continue and provide that unique content through my newsletter. In the coming weeks, I will be disclosing my future stock purchases in my RESP account. Sign up now and you won’t miss my trades.
The newsletter is free, you get around 1 email per month reviewing finances and investing topics. I always get emails from readers on how they appreciate the content as it’s pertinent and helpful.
I am going to reserve a bigger post
Continue reading Weekly Blog Round: RESP Planning
A reader asked a very good question as to how I decide which account to select when investing. I do have some guidelines and rule of thumb based on
- How much money I can invest
- How long I will invest it
- Where I am at with my diversification
- Where I stand with the limits allowed for some accounts
- How I will be taxed on the investment
How to avoid paying the tax man any more money than I need to is probably at the top of my filter . To achieve optimal tax efficiency, you need to understand the tax implication of the different accounts available. I also recommend that you use an up-to-date tax software program, such as TurboTax Canada, to give you step-by-step guidance until you’re ready to file.
Account Tax Treatment
The following accounts represent the most common categorization for investment accounts.
Taxable Account / Non-Registered Account
This is the most common account which can range from a mutual fund account at the bank to an employee stock purchase plan (ESPP) account with your employer. It
Continue reading How To Choose Which Account To Invest From