Location: carl sagan's universe
Posted on: 08-12-08 22:01:44
Hi Nari,
Global RESP has two types - a group sponsored plan and an individual trust plan.
Most likely you are in the individual trust plan. There is a $60 enrollment fee for each unit.
How many units did you buy?
If by any chance you are in the group sponsored plan where there is no enrollment fee, then you can stop contributing and go for a self-directed account in a bank.
However if you have been contributing without a problem uptil now- Global RESP plan is a good plan -it is the most flexible among all the others out there.
I wouldn't worry about having money in Global, unless of course you are convinced you want to go the bank route where some might charge you a fee for a self-directed account.
Trust Plans are not all that bad as they are made out to be, but they are more inflexible than your own self-directed accs.
Thanks a ton – investpro, pratikm, reachash and nari for the extremely valuable inputs.
I have decided to do the following:
1) Not to take up Group, Trust or any insurance based RESP.
2) Will go in for a self directed family plan of RESP with one of the top 5 banks.
I have few questions:
1) Since I am a novice in the field of investment the following just bounced off my head –
Quote:
You can easily create a similar asset allocation at less than 1/3rd of the cost.
Open a self-directed RESP account at your bank or one of the discount brokerages.
Divide your funds into three parts - 1/3rd going to 5-year GICs (which you will ladder every year), 1/3rd going to an bond index fund (like the TD Canadian Bond eSeries fund) and the other 1/3rd going to a TSX index fund or ETF (like the XIU).
Your MER will be around 0.5% and you will have full control of your money and can choose how to allocate it.
Can you give me more detailed inputs, as I fear that I’ll made fool very easily.
2) Which bank out of the top 5 to go for – CIBC, RBC, TD, BMO or Scotia?
I understand people here are working with banks and might take an offence if someone comments about the bank so one can PM me if required. I have been suggested by many good friends not to put all the eggs in one basket and spread it across table in all 5 banks and if not 5 then at least 2 minimized to CIBC and RBC. So what is the view of CDs?
3) What is a bond index fund? What is TSX index fund? What is ETF? What is meant by MER?
4) If I'll go in for a sef directed RESP. Will the Govt. Grant be given or not? if yes the how?
I know the above questions are very common ones but I wish I knew the system of financial game.
Thanks Investpro,
For your valuable suggestion.
You are right its an individual plan and the enrollment fee is $60.0 per unit with total enrollment fee of $1339.26 for 22.42 units. I have committed $50.0 a month in this plan. I called the customer service number today the guy on the phone was quite helpful. Told me i can pull out all my money from the account and transfer to another institution or bank but they would deduct my total Enrollment fee upfront. He also said that i can stop contributing and the previous contributions stays there and grows till the termination of the plan in which case the Enrollment fee would still gets deducted but would be deferred by 18 years. Now after reading post of investpro and hearing positive comments about Global. i am kind of thinking just to keep contributing $50 in this plan and then open another RESP self directed plan under my daughter name in a Bank where there would be a bit more flexibility
Since i have still 1900$ per annum more room to invest . My question is can I open 2 RESP accounts at different institutions for a Same person or i will have to contribute to this plan only should i wish to increase my payments to get maximum government grant. I think my Questions would also cover Shaileshjkumar question about opening 2 accounts with different institutions.
Location: carl sagan's universe
Posted on: 09-12-08 13:32:02
Hi Nari,
Wise decision of not pulling your money out of Global.
You can have multiple RESP accounts for the same child at various institutions.
As an example you can have 1 at Global, the other at BMO and the third at Fidelity (or any other institutions you choose). Make sure there will be no hassle or penalty if for any reason(job loss or going out of country or other) you are unable to make a payment for a month or two or more.
I have 3 plans for my child, 2 in mutual funds and the other in a trust plan.
They are all good.
For Shailesh-if you don not have a trust plan in place as yet- best to go with a bank/financial institution that will not charge you maintenance fees, as those are less rigid than a trust plan.
Location: Brampton, Ont, Canada
Posted on: 09-12-08 15:12:49
I will definitely GET BENEFITS FROM THIS TOPIC.
I am thinking of saving money for my kids.
I was debating should I put money towards RESP or is there any other alternative?
I have one year old Girl and one more coming in May 2009. I am thinking of having joint account for both babies. Is it better to wait till second baby or I can start with one now and join second one after?
Just to let you know I don’t have any investment FOR myself and my wife due to my financial situation BUT I WANT TO SECURE MY KIDS FUTURE.
I CAN AFFORD TO PUT AROUND 300$ -400$ PER MONTHS TOWARDS KIDS INVESTMENT
CAN ANY ONE SUGGEST ME THE good OPTIONS to invest?
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'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
Quote:So out of your first $2000 contributed, about $600 is invested, correct?
Originally posted by nari
You are right its an individual plan and the enrollment fee is $60.0 per unit with total enrollment fee of $1339.26 for 22.42 units. I have committed $50.0 a month in this plan. I called the customer service number today the guy on the phone was quite helpful. Told me i can pull out all my money from the account and transfer to another institution or bank but they would deduct my total Enrollment fee upfront.
So essentially, you have "lost" $1400 regardless of whether you pull out now or stay invested?
Are all your investments being made in that IA Diploma fund?
That fund hasn't made any money since its inception in 2001 and with it's high fees, it will most likely continue to lag normal market returns.
It is your call - I personally feel you can do better elsewhere and gain flexibility at the same time.
Quote:It doesn't really matter.
Originally posted by shaileshjkumar
2) Which bank out of the top 5 to go for – CIBC, RBC, TD, BMO or Scotia?
Each of the major banks have an investment arm and you can open accounts with them.
Or you can stick to the bank itself and invest in the mutual funds and GICs offered by them, which is not a bad thing either.
In this regard, I would rate CIBC slightly lower than the others.
Which is your primary bank?
Go with them.
Quote:Meh, too much overhead for RESP purposes.
I have been suggested by many good friends not to put all the eggs in one basket and spread it across table in all 5 banks and if not 5 then at least 2 minimized to CIBC and RBC. So what is the view of CDs?
If you were investing $1M then it might make a difference.
Some types of your investments like GIC or high interest savings accounts will be covered by CDIC insurance anyway.
There will be CIPF insurance (for what it's worth) beyond that in case of bank failure.
I don't think you will want to invest in individual stocks and bonds initially, so it'll probably be safe to have the RESP at one bank only, except in the case of an overall financial system failure and then RESP is a moot point anyway
Quote:MER is the fees charged by a mutual fund, and is expressed in terms of a percentage of your holdings in that fund.
3) What is a bond index fund? What is TSX index fund? What is ETF? What is meant by MER?
I suggest read up on RESP (Scotia Bank has a good introduction) -
http://www.scotiabank.com/cda/content/0,1608,CID6297_LIDen,00.html
Quote:Yes, you will get the grant.
4) If I'll go in for a sef directed RESP. Will the Govt. Grant be given or not? if yes the how?
The bank will take care of it.
I suggest initially start by opening an RESP account with one of the major banks and invest only in fixed term GICs and high interest savings account within the RESP.
Then start looking into the mutual funds and start understanding what they are, how they invest your money, what they invest in, what is meant by returns, what are fees and how they affect your returns, etc.
I would not recommend that you start investing in mutual funds right away, esp. at a time like this.
Keep in mind a universal rule in investing - do not invest in something you do not understand.
Good luck !
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Location: Brampton, Ont, Canada
Posted on: 09-12-08 17:15:31
Very nice Topic.
I will definitely GET BENEFITS FROM THIS TOPIC.
I am thinking of saving money for my kids.
I was debating should I put money towards RESP or is there any other alternative?
I have one year old Girl and one more coming in May 2009. I am thinking of having joint account for both babies. Is it better to wait till second baby or I can start with one now and join second one after?
Just to let you know I don’t have any investment FOR myself and my wife due to my financial situation BUT I WANT TO SECURE MY KIDS FUTURE.
I CAN AFFORD TO PUT AROUND 300$ -400$ PER MONTHS TOWARDS KIDS INVESTMENT
CAN ANY ONE SUGGEST ME THE good OPTIONS to invest?
-----------------------------------------------------------------
'Some goals are so worthy, it's glorious even to fail.' (Param Vir Chakra awardee Lt. Manoj Pandey)
