As explained by protein, one can still use the monies of RESP in fixed interest long term GICs, the same that you would have done with your personal savings plan for children.

Just as an example, $2,000 invested every year in a 5% fixed interest bearing instrument and compounded each year would become 26,413 at the end of 10th year. If the same is put into RESP and put in a similar instrument, it would yield $31,696 - which basically reflects an extra yield of 20% given to you by the government.

As a prudent parent, one should definitely put in money for higher education of children, and RESP is a good avenue for the same. If one can get 20@ extra, why not do it, and play safe by putting in fixed income secure instruments.

I started saving for my children soon after they were born, and I have been fortunate to have saved enough to provide for their university education if they were to go to university today. Yes you can rely on education loans - and though I am not sure, I have been infomed that such loans are interest free till the time repayment starts. If such be the case, take a loan by all means, and then as soon as repayment (in installments) is due, pay off the whole amount by using that nest you have built up. If however, the children do not turn out to what you intended them to be, and then you feel that all the money you had put in for their education has gone to waste - well, by all means let THEM repay the loan, and you will still have that nest for yourself!

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Chandresh

Advice is free – lessons I charge for!!

Pranav - in my opinion - never play with money that you save for a specific purpose. In today's scene when Indian banks give between 3 to 7 % on fixed deposit, putting your special purpose savings at 15% is not safe!

Moreover, 15 years ago, US$ was equivalent to INR 12 or 13 if I am not wrong - today it is 46. It is a unwritten law in investments - if you need money for a spcific local expense, always invest in the local currency. Interest rates, return on investments etc. and cost of living are interrelated, and if you combine two or more countries in this formula, there are high risks! (and ofcourse high rewards also - but are you willing to take high risks for children's education fund??)

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Chandresh

Advice is free – lessons I charge for!!

WOULD ANY ONE PLEASE EXPLAIN THE THING CALLED 'RESP'.....

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There is no pleasure in having nothing to do; The fun is in having lots to do and not doing it.

Well as Chandresh said it is not worth it invest in India if you want to use it in canadian $..

You have one more option if you really want to invest by your selt. I have a RESP with USC for my son which I had it befoer 3 yrs. USC is based on the pool system. In a pool system you buy the units and you will get return according to no of units up on maturity.

I have opened a self directed RESP for my daughter which is I would prefer more as I have a full control of the investment. I can invest in GIC, Mutual fund , options and also in stocks. Investment is all depend on how much risk you want to take???

I am comfortable with stock market..so far I have nice return on what I have invested...(((((P.S. don't forget your investment can be zero as well...it is a stock market)))))))))))

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Cheers!!!!!!!

Look at this share - SNC-Lavalin. It was about $10 in 1999. Today it is $50. It has risen steadily before, during and after 9/11 attacks.

Hi Indian,
RESP stands for Registered Education Savings Plan. It is a financial planning tool thru which you save for your kids' education but RESP is not only for kids' education. It is a tool thru which you can defer/save taxes too. The reason it is more popular as 'savings for kids' education' is because Govt. of Canada contributes 20% (max $400 a year) of the amount what you invest in any RESP plan like if you put $2000 a year in RESP, the Govt. of Canada will contribute $400 as CESG (Child Education Savings Grant) which will be contributed till the kid reaches age 18. Moreover the amount which you invest will draw interest from the company thru which you invest. There are companies which make claims of interest about 10-12% but on an average it is 6-7% (realistically).Once the kid is ready to go to university, you get all your money back (offcourse you will have to pay taxes on growth) plus the CESG plus the interest. So it is a tool thru which you start saving for better future of yourself or your family and RESP is the only savings in Canada on which you get such ROI (atleast 20% guaranteed, if you invest for kids' higher education).
If you need more detailed information, do let me know.

Rgds,

Happy ji,

Since you know about the RESP's. Would you please let us know, which one is better. There are lots of options available like Heritage etc.

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Live & let Live