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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: Le0 on March 05, 2014, 03:26:37 PM

Title: Canadian RESP
Post by: Le0 on March 05, 2014, 03:26:37 PM
I am wondering if I should start an RESP for my new Daughter, or just setup a TSFA invested properly and put money aside?

Something is telling me that the TSFA would get a better return etc etc. We could also put it in her name and claim it as gifts or something like that each year.

Title: Re: Canadian RESP
Post by: Ziggurat on March 05, 2014, 03:48:27 PM
The RESP has the benefit of a minimum 20% contribution from the government: http://www.servicecanada.gc.ca/eng/goc/cesg.shtml, up to the contribution limit.

Title: Re: Canadian RESP
Post by: isitaneedorawant on March 05, 2014, 04:32:48 PM
I would contribute to a family plan RESP to the maximum contribution for the government grant. This varies on income. My understanding is you cannot open a TFSA for an individual until their 19th year. That is if they turn 18 this year (2014 tax return) you cannot open the TFSA until 2015.
Title: Re: Canadian RESP
Post by: Prairie Stash on March 05, 2014, 07:16:51 PM
I just set up a self directed RESP. It behaves exactly like a TFSA, except the federal govt gives me a 20% bonus on the $2500 I put in. Where else do you get a guaranteed 20%?
I still need to come up with $5000 ($2500 for last years room, I'll get $1000 from Feds, $500 from my province).
Then I'll buy either i60 or vanguard canada ETF.

It's a family plan, money can be used for any future kids. Investment growth, if not used, can be rolled into a RRSP without penalty one day. Or you get taxed on the earnings, no big deal.
Title: Re: Canadian RESP
Post by: Le0 on March 06, 2014, 07:50:02 AM
Ok from what everyone is saying it sounds like there are some good options.

Where can I set up a self directed account? I have been looking at Questrade from my RRSP's and TSFA's.
Title: Re: Canadian RESP
Post by: daverobev on March 06, 2014, 10:13:45 AM
Ok from what everyone is saying it sounds like there are some good options.

Where can I set up a self directed account? I have been looking at Questrade from my RRSP's and TSFA's.

I like Questrade. There are other discount brokerages; Virtual Brokers, QTrade I think. But Questrade do what I need them to so I don't look further.

If I was going to invest a *large* amount of money I might look at one of the big banks; they are now down to $10 a trade. Questrade is free when buying ETFs. I have an RESP with them, no issues - touch wood.
Title: Re: Canadian RESP
Post by: Ottawa on March 06, 2014, 11:31:16 AM
I second Questrade.  Was with them for a year with margin account.  Just tranferred RRSP/TFSA/Margin from TDW.  Keeping RESP with TDW cause I like the e-series funds...
Title: Re: Canadian RESP
Post by: Le0 on March 07, 2014, 01:41:44 PM
My plan at the moment is to invest the tax return windfall into Questrade. With a TSFA. However I will have to look at RESP and RRSP. Thanks everyone it does help to be able to bounce ideas of like minded people when it comes to money.
Title: Re: Canadian RESP
Post by: Ottawa on March 07, 2014, 01:45:08 PM
My plan at the moment is to invest the tax return windfall into Questrade. With a TSFA. However I will have to look at RESP and RRSP. Thanks everyone it does help to be able to bounce ideas of like minded people when it comes to money.

Le0 - I'm not sure why you wouldn't set up an RESP.  The CESG is free money - when you put in $2500 - the gov puts in $500.  The CESG will only be credited into an RESP...not a TFSA
Title: Re: Canadian RESP
Post by: Ottawa on March 07, 2014, 01:58:40 PM
Here is what ours has done!

In summary: we have contributed $30,300, the government $3,500 and the remaining $14,104 is investment growth.  So, in all, $47,904 represents a 57% return on our investment of $30,300 (As of 28 February 2014) or just under 12% on an annualized basis.

Title: Re: Canadian RESP
Post by: Ottawa on March 07, 2014, 02:03:59 PM
Here is the allocation using the TD Eseries funds...it is very easy to do! 
Title: Re: Canadian RESP
Post by: Prairie Stash on March 07, 2014, 02:57:24 PM
I set my RESP up with a big bank - $10/trade (no annual fees since I have over $50K with them).  Since it's for my daughter I won't make many trades (low risk strategy).  Basically early in the year I'll drop the money in ($2500), get the matches (30% in my province) and then buy an ETF.  $3,750 for 12 years, should be more than enough for University (with growth). If its not I'll top it up for a few years when she's 16.

Very important - You need to fill out the form for the grant if you do self directed, it's a whopping 1 page long ;)