Almost 3 years ago, I had a baby. That baby was much cuter than anyone else’s baby. Other babies were annoying but mine was special… I wanted my son to have every advantage possible in life. So when I heard about RESP’s which is a program where the government gives you $7500 $7200 (Thanks Mike!) for saving money for your kid’s education, I was all for it.
Little did I know the total confusion that would lie ahead. First I called the people from the pamphlet at the hospital, there’s a decent picture of a baby (still not as gorgeous as mine) on it. Not to be rude but they really pissed me off for the following reasons.
Continuing to tell me about the 20% grant I would get from government
Not telling me what return I would get from their investment plan
Telling me that I would make an unspecified mysterious return from people who did not go to school or dropped out from the plan. (this sounded too much like stealing to me)
I happened to be eligible for the low income grants as well, as great as RESP’s are they’re even better if you have no money at all. Then you don’t even have to put any money in, you just have to start the RESP and you get $500 right off the bat and $100 per year. The problem is that I had a really hard time finding a RESP to hold equities that would also apply for this particular grant. Jerry (one of my regular readers) asked me to clarify this.
I did not find any self directed RESP’s that allowed trading that also applied for the additional 20% (on the first $500) CESG that you are entitled to if your income is low. Or the free $500 you get for starting the account or the $100 per year after that. A self directed RESP would have been my #1 choice if I didn’t have to give up $600 in grants in the first year alone.
I went to my own bank TD and I had to educate them about it, the only program they had you could also get the additional CESG for was a GIC holding account. YUCK. With 17 years to go I’d like to make more than 2%. TD’s solution was to put the money in the GIC RESP then get the grant then transfer it over to another RESP account that would hold equities. So they upset me too.
Why didn’t they have a proper plan in the first place?
Finally I decided to put my RESP with Investor’s Group, because I had a friend there that would do it for me. I have to pay high MER’s on their funds but quite frankly I just didn’t care anymore. I was sick of the entire ordeal something that should be simple has become complicated, difficult and irritating. I found myself in the position of educating the staff at the bank about RESP’s. First I spent many hours educating myself, reading the government website, reading pamphlets, learning about the different plans.
As I read and correct this post, I find myself getting very annoyed, between the banks and other institutions that hold the RESP’s and the government they have managed to make a system that should be simple and easy into a convoluted, confusing nightmare specifically if like me, when you apply you’re low income. No matter the difficulties; however, with a 20% grant the biggest mistake is not taking advantage of it. But you’ll need help… which leads me to a solution.
RESP Book written by Mike Holman
When my friend and fellow blogger Mike from Money Smarts Blog told me he was writing a book about RESP’s I thought “It’s about time!” So the day before yesterday…I read a review copy of the book. It’s like a breath of fresh air for information starved people looking for an RESP. It took me about 2 hours to read (I read at the speed of light) and had all the information it took me 6 months to learn. Every single thing you need to know about RESP’s is in there, written in an easy to understand manner, instead of in 9pt type by a lawyer.
People Who Would Benefit From This Book
Mostly the kids (even though they’ll never read it)
Anyone who works for a bank selling RESP’s (Yeah, I’m not kidding at all)
So you should go buy the book, it’s available on Amazon < Click here and save yourself some frustration.
Why You Should Buy 10 Copies
A book is never just a book. There are many reasons you can buy a book and not all of them have to do with reading.
You are a bank and you have 10 staff who deal with RESP’s
You know 10 people with kids and Christmas is coming
You have 10 low income tenants and you want to do something nice for their kids so they don’t have to live in low income housing.
You know 10 grandparents who would be thrilled to make at least 20% on their money who have grandchildren
You have a 10 legged table and one of the legs is too long and you need 9 books to put under the legs so the table doesn’t rock. The 10th book is for reading.
You have an empty library and you need to fill it with books to look smart.
You have 10 friends (lucky you)
You want to give them to your employees
You want to lend Mike some money but you don’t want him to know
You’re altruistic and you want to leave 10 copies at the hospital
Ok, now that I’ve convinced you with my eloquent prose, go buy your 10 copies before they run out.
Now back to the really interesting part…my son. He currently has over $10,000 bucks in his RESP and he’s going to be three at the end of this month. He’s a little genius (did I mention he was great) and that should at least pay for a week of medical school when he’s ready to go. (When he’s 12 or 13 at the latest). He’s growing a moustache already so he’ll blend right in.