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Our daughter has just turned three. We have ~6K in her RESP account. We put $100/month into it. We have equities at the moment, mainly dividend paying. I'm not sure what the return rate will be/is, but just out of curiousity I calculated how much she would have in 15 years if we kept the money in a simple savings account. If we keep up the $100/month at a modest interest rate (say 1.5 or 2%). In the end she would have just shy of 30K (give or take). To me this is not nearly enough.

I know she can get student loans, bursaries, scholarships and I will insist she apply for these things (I'd rather her not working during the school year unless she simply wants to vs needs to).

I am curious what others are doing for their children's education?
 

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Nada. Heresy, I know. But only because my parents have committed to fund (a significant proportion of) their grandchildren's post-secondary education costs. I am focussing on the other aspects of ensuring educational success, like having a lot of books in my house.

(I hope it's clear that my tongue is in my cheek. But yeah, we have well over 500 books in our house, and probably nearly 100 are cookbooks...)
 

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I'm with MoneyGal - let the Grandparents do the heavy RESP lifting. :)

My kids are 2 & 4 and the account has about $15k in it.

My plan is to fully fund it eventually but it's just not a priority at the moment. Paying the mortgage off, maxing out RRSP - they get done first.
 

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To be frank my plan is the "pay as you play" strategy. My parents have invested funds for long-term growth (my kids are almost-6 and 8).

For my part, I hope to be debt-free by the time they are entering university - this would free up cash to just pay the costs as they arise.

I sometimes think these discussions get too focussed on products. I like simple.

I'm also disinclined to buy a product when a different strategy will accomplish the same goal.

Every dollar into an RESP is a dollar *not* invested in my own TFSA and RRSP - or into other things which I believe will have a high correlation with my kids' academic success, for that matter.
 

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We saved $20k per child (they are now 22 and 16) with the idea that that should pay for a Bachelor's degree at a local university. (We did not use RESPs, though I suppose we should have!)

My son (the 22 year old) lived at home, earned scholarships and worked summers to pay for his books and tuition...when he graduated we transferred the trust fund fully into his name for him to do with what he wants. He is currently in Grad school (and living with his girlfriend) and paying his own way in the world....he hasn't spent any of the money yet, though is talking about spending some time in Australia when he finishes his Masters. (or maybe he'll use it for a down payment on a house...who knows!)

The same deal will apply to my daughter (who is finishing grade 10.)
 

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To be frank my plan is the "pay as you play" strategy. My parents have invested funds for long-term growth (my kids are almost-6 and 8).

For my part, I hope to be debt-free by the time they are entering university - this would free up cash to just pay the costs as they arise.

I sometimes think these discussions get too focussed on products. I like simple.

I'm also disinclined to buy a product when a different strategy will accomplish the same goal.

Every dollar into an RESP is a dollar *not* invested in my own TFSA and RRSP - or into other things which I believe will have a high correlation with my kids' academic success, for that matter.
Perfectly good strategy. The only drawback is that you miss out on free grants. Not the worst thing in the world.
 

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We contribute enough to get the max CESG. So, it's $2,500 per year per child. But RESP is lower on the list of priorities and if money is tight in some years, we won't contribute to the RESP. We are hoping that the kids will have $36K plus $7,200 CESG plus whatever the investments earn over the years. We'll either ask the kids to make up any shortfall or fund it ourselves depending on how our circumstances are when the kids go to university.
 

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I don't miss out on the grants - my parents' contributions attract them. If my parents were not making contributions for my kids, I'd consider opening RESPs in their names. :D
 

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Interesting to hear what others are doing.

I'm just starting planning RESP contributions for our first child (to come in Nov), and I was thinking of maxing out the $50k, preferably most of it in the first few years (as much as possible).

Do any of you think that the RESP could grow too large? Based on the TD Economics Report released late last year, my projections have a fully funded RESP still not reaching $135k.
 

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Pretty relevant topic for me, since I'm only 2 weeks into this parenting thing. My wife's parents are putting in $1000 this year, so we'll do the other $1500. Perhaps this arrangement will continue in years to come. Need to actually set up the RESP in the coming months.

Not sure how I feel about a fully funded education. I think I'd like to cover the first couple of years, and let them take loans for the rest. In our school days, we all recall seeing kids born with silver spoons in their mouths handed everything they want, and perhaps a bit of a negative correlation with how seriously they take school. I suppose good parenting could counteract that...
 

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Interesting to hear what others are doing.

I'm just starting planning RESP contributions for our first child (to come in Nov), and I was thinking of maxing out the $50k, preferably most of it in the first few years (as much as possible).

Do any of you think that the RESP could grow too large? Based on the TD Economics Report released late last year, my projections have a fully funded RESP still not reaching $135k.
Interesting thought. I definitely think it can get too large although the ramifications of that are not too significant. Perhaps the student will pay a bit of income tax withdrawing the money.

Of course if you put $50k in now, and the returns are really good for the next 15 years....you might need to have more kids just to use up the money. :p
 

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Of course if you put $50k in now, and the returns are really good for the next 15 years....you might need to have more kids just to use up the money. :p
Well if you put it that way...

We certainly can't afford to max out in the first few years, but say get to the $50k cap by year 12-14 (average $3-5k) for the first few years.

I'm actually quite seriously considering using a self-directed account vs. the 'standard' TD e-series, since I think we will try to get a sizeable lump in there early. We'll see, I'll have to mine the blogs for expense projections..., we'll probably end up broke like all other parents :eek:
 

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I thought I would comment on this now, as not married, no kids, perhaps I would look back on this and see how my views have changed.

However, I had only planned on putting approximately enough in a childs RESP (over time) to cover their tuition. Then the child would have to use their summer job $ for some of their schooling, depending upon where they decide to attend/live/study. Getting a bit of an appreciation for the value of a dollar.

Hey I dunno...maybe they will take after their mother and be smart enough to get a scholarship or bursary.
 

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Discussion Starter #15
Thanks everyone, it seems there's quite some interest in this topic. I'm a bit jealous of those who have grandparents helping out; my folks and my hubby's mom are all pretty much financially destitute, so there's no chance of them helping out with anything. Ever. :( But thats okay, we can do it on our own.

My husband corrected me - we put $100/month and top up when we can to max it to $2500/year as well (to get the max grant). The free money (grant) is a big draw for us. I believe you get $500/yr grant is it? It maxes out though over time I'm pretty sure... I used to know all this by heart but it's been a couple of years now. What is the lifetime max grant amount, anyone here know?
 

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Thanks everyone, it seems there's quite some interest in this topic. I'm a bit jealous of those who have grandparents helping out; my folks and my hubby's mom are all pretty much financially destitute, so there's no chance of them helping out with anything. Ever. :( But thats okay, we can do it on our own.

My husband corrected me - we put $100/month and top up when we can to max it to $2500/year as well (to get the max grant). The free money (grant) is a big draw for us. I believe you get $500/yr grant is it? It maxes out though over time I'm pretty sure... I used to know all this by heart but it's been a couple of years now. What is the lifetime max grant amount, anyone here know?
$7,200.

Here's a post I did which is basically a quick summary of RESP rules.

http://www.moneysmartsblog.com/2010-resp-contribution-rules-and-withdrawal-rules/
 

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Well if you put it that way...

We certainly can't afford to max out in the first few years, but say get to the $50k cap by year 12-14 (average $3-5k) for the first few years.

I'm actually quite seriously considering using a self-directed account vs. the 'standard' TD e-series, since I think we will try to get a sizeable lump in there early. We'll see, I'll have to mine the blogs for expense projections..., we'll probably end up broke like all other parents :eek:
The max. RESP contribution is $50,000.
The max. CESG is $7,200.
The RESP contribution that gets the maximum CESG is $36,000

I suppose you could contribute $14,000 upfront and then contribute $2,500 over 14.4 years to maximize the CESG. I think the CESG is far too valuable to give up even with the additional years of tax sheltering.

Hey, there's enough for a blog post here :)
 

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Discussion Starter #18
I thought the annual limit was $500 of grant money, with the lifetime max ($7200 as pointed out). I don't believe you can get the lifetime max right away.. although that would be nice!

edit: Ahh I see, I misunderstood CC's post. I still think there are maximums though you can put in each year? I know, I need to stop asking and start reading, especially since Four Pillars so kindly posted a link to it all! :)
 

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I still think there are maximums though you can put in each year?
There used to be, not any more.
If you wanted to, you could put the entire $50,000 in at one shot.
However, you'd get only the max grant for 1 year i.e. $500.
You'll miss out on the other $6,700 since you have maxed out the lifetime limit.

For someone with a newborn baby and the $50,000 in hand, some quick math can be done to figure out whether lumpsump contribution in the first year allowed to compound for the full 17 years is more profitable rather than the more common $2,500 every year to get max. CESG grant.
 

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The max. RESP contribution is $50,000.
The max. CESG is $7,200.
The RESP contribution that gets the maximum CESG is $36,000

I suppose you could contribute $14,000 upfront and then contribute $2,500 over 14.4 years to maximize the CESG. I think the CESG is far too valuable to give up even with the additional years of tax sheltering.
That was the plan ;). Although depending how you model the ROR, I still think 12+ years of tax sheltering can exceed the benefit of the CESG. Any arguments (or math) against this?

Hey, there's enough for a blog post here :)
Now you FT, and Mike have to see who gets the post out first ;) Make sure to include some examples and math please ;)

OT: have you guys ever considered a series of 'cross-over' blog posts, like Superman vs. Spiderman sort of deal?
 
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