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Discussion Starter #1
Hi Members,

I added my 5-year-old daughter as the beneficiary of my RESP account and the mutual fund is "RBC Target 2030 Education Fund". The plan will mature after 13 years which is when she will turn 18 and it fits well with her time to start post-secondary education.

My 5-month-old infant son has not been added to any RESP plan yet. Even though the newly released RBC Target 2035 Education Fund suits his ideal time to start post-secondary, I am thinking whether I would be better off adding him next to his sister on the same plan - Target 2030, instead.

I can think of one advantage. There won't be two distinct RESP accounts, and therefore, not twice the fees related to MER of one account.

But I need to know whether I can continue to invest on the account for 5 more years for my son after Target 2030 matures and after my daughter starts going to school in 2030.

Anyone has any suggestions?

Thanks.
 

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:) Guy Not sure why anyone would want to enable their child to take the dead end path of the education bubble ?

The worst investment is usually the most over crowded by the most inexperienced i.e., education
 

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You will not pay 2X the MER. the MER is a % of thedollars invested.
exactly :)

I have 2 kids (22 and 16). Son (22) is last year university student, daughter - grade 11. We have 2 mutual funds RESPs (son is primary on1st, and daugher is primary on 2nd). Also we have joint Term RESP (for GIC). In TD you cannot hold GIC together with MF :(.
I;m frequesntly transfer my daughter MF RESP money to my son's and withdraw it as PSE redemption. Later I invest it in online banks who gives significantly better rate than TD.
For example I contribute $5000 (I have some room) to my daughter, get $1000 in grants and withdraw this $5000 under my son name and invest it somewhere in Oaken or Tangerine (where rate is higher)
 

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Discussion Starter #6
:) Guy Not sure why anyone would want to enable their child to take the dead end path of the education bubble ?

The worst investment is usually the most over crowded by the most inexperienced i.e., education
lonewolf, I am not certain what you meant. Were you suggesting that the whole idea of RESP is wrong? I guess someone else would be interested in answering the question I raised.
 

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Discussion Starter #7
exactly :)

I have 2 kids (22 and 16). Son (22) is last year university student, daughter - grade 11. We have 2 mutual funds RESPs (son is primary on1st, and daugher is primary on 2nd). Also we have joint Term RESP (for GIC). In TD you cannot hold GIC together with MF :(.
I;m frequesntly transfer my daughter MF RESP money to my son's and withdraw it as PSE redemption. Later I invest it in online banks who gives significantly better rate than TD.
For example I contribute $5000 (I have some room) to my daughter, get $1000 in grants and withdraw this $5000 under my son name and invest it somewhere in Oaken or Tangerine (where rate is higher)
gibor, your case is different. By the way, why would you have 2 different RESPs where you would add both kids?
 

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gibor, your case is different. By the way, why would you have 2 different RESPs where you would add both kids?
When our daugher was born and we went to the bank, rep didn't mention that such option exist (generally I noticed that reps in the bank don't understand RESP at all) and i didn't know. In any case, sometimes it's convenient as I had different very asset allocation for my son and my daugher. Actually for last 3-4 years I have 0 balance on my son RESP and just from time to time transfer money from daughter's to son's RESP in order to withdraw
 

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Discussion Starter #9
When our daugher was born and we went to the bank, rep didn't mention that such option exist (generally I noticed that reps in the bank don't understand RESP at all) and i didn't know. In any case, sometimes it's convenient as I had different very asset allocation for my son and my daugher. Actually for last 3-4 years I have 0 balance on my son RESP and just from time to time transfer money from daughter's to son's RESP in order to withdraw
Thanks, gibor. I still am not sure about an answer to my concern.

I need to know whether I can continue to invest on the account for 5 more years for my son after Target 2030 matures and after my daughter starts going to school in 2030. Does a family plan RESP allow that even after the plan matures?
 

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I don't undestand you question... You can contribute until your kid is 17, them you can withdraw this kid RESP and younger kid PSE
 

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The Target 2030 is just a mutual fund. You can invest contributions you intend for your daughter into the 2030 fund and contributions you intend for your son in the 2035 fund, all within the same RESP family account. (Note: I've never had an RESP so I'm just explaining my best understanding, best to confirm with the bank to be sure).

The account will be a family account containing 2 mutual funds, the 2030 and the 2035. I don't see why they would have any problem with this. And then you have more flexibility if say one kid decides to be a doctor and the other decides to go work on a cruise ship as a waiter.

Also there's no "maturing", I'm pretty sure. Once you reach 2030 they might shut down that mutual fund but they will let you keep your money in the RESP account either in cash or invested in some other mutual fund you might choose.
 

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Yes you can and should add your son to the same plan. You designate contributions based on the individual child. And grants are paid by the government based on who you designate the contribution to.
. One child can be going to university and making withdrawals from the RESP, while you are making contributions and receiving grants for the other child.
There are a couple of things to note...
- While the bank will keep track of contributions and grant per child, the money in the plan is pooled so growth may be attrbuted to either child.
- grant paid for the first child can be used by the second child provided you don't withdraw more than 7200 CESG per child.
- Life of an RESP is 31 years from date open for contributions and must be wound fown in 35 years. This might become a fsctor if you have a third child in another 5 years :-o
- note that if you want to be perfectly fair in the money split between children you may have to use separate funds for each child within the plan and may have toinvest CESG into the proper fund for each child.

Just a word on the target education funds. At the maturity date they are essentially mostly money market and fixed income and remain that way until withdrawn. The theory is they gradually reduce the risk in the portfolio as the child nears the education date, then it remains safe during the withdrawal period.
So you could have your daughters money designated to 2030 and a second fund for 2035 for your son.

Congratulations on planning now for your childs future. One thing my son has thanked us for numerous times is setting up an RESP so he could graduate debt free. ( we even had enough left to surprise him with a car). Unlike his girlfriend who was struggling with over 30k in student debt and unable to find a job in her field. Thankfully she was willing to take any job and is paying down her det quickly.
 

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So tidal

So our plan is 19 yo and have a GC who is 5. (GC#1 is in second year. He is GC#5.) So he will be out of the plan at age 23. That is 18 years from now. What you say is that the plan will mature when he is (19+13=31) 18 yo. Can I roll the balance into a new plan for him then? This is just to preserve the balance since no new contributions are allowed.
 

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Discussion Starter #14
..........................

Congratulations on planning now for your childs future. One thing my son has thanked us for numerous times is setting up an RESP so he could graduate debt free. ( we even had enough left to surprise him with a car). Unlike his girlfriend who was struggling with over 30k in student debt and unable to find a job in her field. Thankfully she was willing to take any job and is paying down her det quickly.

Your last paragraph is an embodiment of how imperative it is to invest for a child in RESP.
 

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Discussion Starter #15 (Edited)
One child can be going to university and making withdrawals from the RESP, while you are making contributions and receiving grants for the other child.
Can I do that if I have only one fund, say, RBC Target 2030?

With such a single fund, is this a valid scenario that, in year 2030, my daughter has started going to university and making withdrawals while my son still receives contributions+grants and continues waiting 5 more years to start university? (Of course, keeping in mind that CESG is max $7200 per child.)

But, then, in 2030 and onwards, the fund will be cash-oriented, not growth-oriented, as you described earlier. So, at that time, can I separate my son's portion (along with some arbitrary growth) and move to Target 2035, instead of letting the money lie in the old fund, almost dead with little growth for 5 years? Or, would I be better off starting to invest in Target 2035 now than in 2030 for my son?
 

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Can I do that if I have only one fund, say, RBC Target 2030?

With such a single fund, is this a valid scenario that, in year 2030, my daughter has started going to university and making withdrawals while my son still receives contributions+grants and continues waiting 5 more years to start university? (Of course, keeping in mind that CESG is max $7200 per child.)

But, then, in 2030 and onwards, the fund will be cash-oriented, not growth-oriented, as you described earlier. So, at that time, can I separate my son's portion (along with some arbitrary growth) and move to Target 2035, instead of letting the money lie in the old fund, almost dead with little growth for 5 years? Or, would I be better off starting to invest in Target 2035 now than in 2030 for my son?
Yes to all of this. You can do this one fund if you wish. And at some date in the future split a portion off into a different fund.
Or you can do it with a separate fund for each child.
Your choice.
I think I would start with a second fund but that is just me.

Some parents have a thing about equality and want to keep contributions and investments separate between children. This does not always equate to equal treatment as investments may grow at different rates do one child may end up having more in RESP. Other parents just pool the investments and try to withdraw roughly equal amounts for each child. Of coure the second child will likely face higher tuition due to inflation and or different tuition due to different University or courses.

I think it is crazy to try to be exactly equal. Best IMHO to be as fair as possible and top up as necessary to ensure your child gets through. The child should be expected to contribute something, either through summer jobs, part time work.
I think they appreciate their education more if they have to work for some of it. The fact that you are assisting with RESP, shows to them the importance of planning and saving ahead and the value you place on education and in helping them get a good start in life. Some reliance on debt is ok but many graduates can feel overwhelmed by huge debt loads and if they struggle for too long it is not good.

Cheers
J
 
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