I think I met with one of those companies. They prey on the fact that some new moms are longing for adult company & are happy to meet for a while then feel vested. They sold the higher return idea because they keep all the cash of the kids that do not go to school in the pool. But I didn't want to risk loosing my principle.
In the end I just went with my bank. It was pre-MMM so they are invested in GICs & mutual funds, not ideal, but I have control and may switch to Vanguard soon.
If I had to start from scratch today, I would invest in Vanguard Couch potato with my online RBC investing account.
http://canadiancouchpotato.com/wp-content/uploads/2016/01/CCP-Model-Portfolios-Vanguard-2015.pdfAggressive Year 1-4
Assertive Year 5-9
Balanced Year 10-14
Cautions Year 15-19
Conservative Draw-down period (maybe even all cash or GIC by this time)
I just made these years and balances up now.
Does anyone else want to share their Vanguard risk/age balance plan? Thanks "Travelling Biologist"
For all the rules without a sales pitch I would read the details on this site:
http://www.esdc.gc.ca/en/resp/info.page#h5I was really surprised "RESP accounts can stay open for up to 36 years." I think those scams have a shorter use it or loose it window.
To get the best grant leverage you can contribute $2500 per year. I max this out before my RRSP or TFSA because I think the government match is such a good deal. I see it as making 20% on my investment!!!!!
The government match is upto $7200 with $500 per year. So basically within your first 15 years (14.4) you should reach the match limit. But $2500 per year * 15 years is only $37,500 and you can invest upto $50,000.
So to actually maximize your deposits and time for compound interest you should invest $3333 per year ($50,000/15). Once they turn 15 you must stop since the contribution limit is reached and the grant limit is reached so just let the money compound for a few more years.
There are serious penalties for over contribution "you will be required to pay tax in the amount of one percent per month on your share of the over-contribution until it is withdrawn."
Oh wait! I am having too much fun with different scenarios. If money was no object you should invest $16,500 in year one, than $2,500 per year for years 2-14 and one final $1000 in year 15. That would maximize the time for compound interest, but what new family has an extra $16,500 in the first year?
Psychologically I think a lot of us don't see the point in investing more than the $2500 to get the grant match, but if you had a windfall anytime during your kid's childhood you could throw a larger chunk down to take advantage of tax-deferred compound interest. There is "no annual contribution limit", however, you can invest too quickly and miss out on the grants.
If you want to invest more slow and steady, yet make sure you get the max grant, invest $2000 for 18years. That will be a match of $400 per year * 18 years for the max $7200 grant.
I don't think you can go wrong investing between $2000 and $3333 per year, just keep track of your total contribution and stop once it reaches $50,000.
I hope that helps, just remember, something is better than nothing because of the 20% grant. Some provinces even offer a little more.
Please provide an update of how the meeting went.