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    Anyone else think these RESP's are a rip off? Why can't I just invest that money in stocks fo rmy kids?

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    My brother and I were just discussing this yesterday. He pointed out that the biggest problem with RESPs is the loss of growth you suffer if your child decides not to go to college/university.

    He's supposed to get back to me with some info on a better option, so I'll post that info when he does.

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    I have one for Alysa through Canadian Scholarship Trust and I dont seem to mind them. I mean they do take some administration costs that i dont agree with but they have helped me get qualified for the extra $500 a year (not sure for how long) towards their tuition and stuff as well.. not sure if you can still get that if you arent invested in an actual RESP.

    Plus if they decide not to go to college, my husband can get back whatever we invested (minus the interest???)...
    I would love to do stocks as well if anyone finds a good one, please let me know.
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    What do you mean loss of growth?? I know very little about investments so I just wondered. we have RESP's for dd.. but our rep from the company we used explained to us that with her company if Kaitlyn does not go to ANY school (meaning she can use this for trade school or wahtever) .. but if she chooses not to do anything post secondary and we choose not to pas it to another child (which as of now we do not have).. then we/she would get everything we invested.. plus the interest still... that the only thing not returned to us would be the government added 20% per year (you know their bonus that they give)
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    Quote Originally Posted by Kaitlyn'sMommy View Post
    .... but our rep from the company we used explained to us that with her company if Kaitlyn does not go to ANY school (meaning she can use this for trade school or wahtever) .. but if she chooses not to do anything post secondary and we choose not to pas it to another child (which as of now we do not have).. then we/she would get everything we invested.. plus the interest still... that the only thing not returned to us would be the government added 20% per year (you know their bonus that they give)
    We were 'mandated' my other half's ex to do $150.00/month RSEP for his son (on top of our court mandated child support) as part of their divorce settlement...this is the way it was explained to us as well...if he does not go to secondary school then government takes back the part they contributed ($500/year + interest) and the rest of our investment and interest on our portion would roll over into his fathers RRSP...so the only lose would be the portion the government contribute and then of course the TAX when you take it out! GRRRRR hate how they tax you for earning it and then tax you again for withdrawing it...just hate that!!!!

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    You CAN invest in stocks. You can do whatever the heck you like with your money. However, stocks are not exactly the type of investment most advisors would suggest for your purpose. Buy hey, if you want to take the extra risk and lose out on the government bonus, there's nothing stopping you. I would just ensure that you can afford to send your kids to school even if you lose everything. Need I mention Nortel...

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    Quote Originally Posted by Kaitlyn'sMommy View Post
    What do you mean loss of growth?? I know very little about investments so I just wondered. we have RESP's for dd.. but our rep from the company we used explained to us that with her company if Kaitlyn does not go to ANY school (meaning she can use this for trade school or wahtever) .. but if she chooses not to do anything post secondary and we choose not to pas it to another child (which as of now we do not have).. then we/she would get everything we invested.. plus the interest still... that the only thing not returned to us would be the government added 20% per year (you know their bonus that they give)
    That's what I was thinking... maybe we're missing something?

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    I believe if you cash it out, not used for schooling (any schooling), then yes you lose the government's money (plus it's interest percentage?) and you are then tax on your amount.

    I've had RSEP for my kids. The first one use not quite all his, so the remaining funds are added to my other two. I was amazed that when I wanted to use the RSEP, all I had to do was show the bank the college acceptance and tuition cost, and they cashed it out. I thought there would have been more hoops to jump through than that honestly.

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    We just have a savings account for DS. We do $100 a month in a high interest savings account. By the time he is 18 there will be over 20,000$ in it plus interest. He will be able to use it for whatever he wants. New car? downpayment on a house? school, wedding etc. I don't like how OSAP treats RESP's so I'd like my kids to avoid that.
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    Quote Originally Posted by totallyawake View Post
    We were 'mandated' my other half's ex to do $150.00/month RSEP for his son (on top of our court mandated child support) as part of their divorce settlement...this is the way it was explained to us as well...if he does not go to secondary school then government takes back the part they contributed ($500/year + interest) and the rest of our investment and interest on our portion would roll over into his fathers RRSP...so the only lose would be the portion the government contribute and then of course the TAX when you take it out! GRRRRR hate how they tax you for earning it and then tax you again for withdrawing it...just hate that!!!!
    On a side note, contributing to you step-son's RSEP now might be a wise way to go. When I split from my children's father, we agreed upon splitting 50-50 the 'extra cost' of education, extra activities, etc. Since he never lived up to paying the 50/50 split or his correct child support, I took him back to court and the judge changed the split to 80 (him) / 20 (me). Since I had the RSEP's, I had already paid my portion . All sent through FRO & interest now and I'm slowly getting my money .

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    Quote Originally Posted by princess2808 View Post
    We just have a savings account for DS. We do $100 a month in a high interest savings account. By the time he is 18 there will be over 20,000$ in it plus interest. He will be able to use it for whatever he wants. New car? downpayment on a house? school, wedding etc. I don't like how OSAP treats RESP's so I'd like my kids to avoid that.
    Could you (or anyone) please explain the OSAP bit to me?

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    OT - Kaitlyn'sMommy I have been trying to PM you for weeks. Maybe they aren't going through? try e-mailing me at jeniandmike@sympatico.ca thanks!




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    totallyawake said
    the TAX when you take it out! GRRRRR hate how they tax you for earning it and then tax you again for withdrawing it...just hate that!!!!
    I'm fairly sure you get a tax refund for contributions to a child's RESP. They are tax deferred like RRSP's. At least this is what we were told by our financial advisor....

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    i started RESP's for both my kids since the month they were born (they rolled into one when i got their SIN #) The reason I really like them is that it is something I can do and not think about it. There is almost no risk involved, you get your principal back if your child doesn't go to school, tax-free, you get the investment income earned back also (taxable) or you can transfer it to your own RRSP or spouses (if you have room)..or as other's said, to a sibling. It isn't a perfect plan but, for my family it is worth it. We treat our monthly payments like a mortgage, they must be paid. My parents didn't have any educational savings for myself or siblings, and it would really have helped pay for school...or at least give me options. Even though we have RESP's, i know it won't be enough to pay for school so we will open a high-interest savings account for kids, or maybe a GIC. I know that i feel secure knowing I have something set up for them, alot more than my parents did for me. When the time comes for them to go to school, it is their decision..yes, if they don't then we lose out on government grant, and return of fee, and any top-ups..but, i won't be losing any money as i get mine back. Let's hope they choose to go to school though!!!

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    Quote Originally Posted by gogomom View Post
    totallyawake said

    I'm fairly sure you get a tax refund for contributions to a child's RESP. They are tax deferred like RRSP's. At least this is what we were told by our financial advisor....
    RESP contributions aren't like RRSP's, you don't get a tax-break on them but, you don't have to pay taxes on them when you w/d your principal. So, it doesn't really help out when you do your yearly income tax the way RRSP's do...but in the future you won't get taxed to w/d principal whereas RRSP's you do.

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