I am finally getting back to the blog posts after a business transition which I started preparing for in the Spring of 2014 and have now finished the biggest part of. If you are a client reading this, you know what that is all about and I thank you again for your patience and your efforts in helping me through this. What I didn’t miss a beat on through this time was the “Mutual Gains” financial letter which I have written every 2 months since 1987. If you aren’t subscribed to that, I really encourage you to do so. Do that here and do that now.
The reason I say “really encourage” is because just this morning a client of mine emailed me asking if she should put some extra money in the RESP she had set up for her daughter. It caught me a little off guard. I thought “am I losing it or did I set up an RESP for her?”. I had to check my records. No, I wasn’t losing it. Unfortunately, what she was referring to was a “Scholarship Trust” RESP she had set up, I’m guessing, right after her daughter was born. You know, the one a salesperson calls you about right after you just had a new addition to the family?
I say “unfortunately, because I don’t recommend these plans at all. They are heavily front loaded in fees to pay the salesperson who sold you the plan. As well, your money is invested strictly in Government Of Canada bonds. With interest rates at such low levels and considering how long the money is going to be invested for (18 to 22 years or longer), the money you potentially can have, versus what you will have, could be miles apart.
Anyway, the point is, the caveats and warnings I had written about many times about scholarship trust RESP’s were there. They just had to be read. Although, frankly you don’t even have to do that. An email or phone call to me or any other financial advisor would have kept, what I deem to be, a costly mistake from being made.
So if you didn’t already click on the “do that here and do that now” link above, you can subscribe to the communications that come from my desk by clicking here . If you were notified of this blog post through an email, you are already on the E-Loop.
If you want to see what I wrote in the past about Scholarship Trust RESP’s you can find them here:
Mutual Gains #121 (Sept / Oct 2007) , In the Hhhmmmm section of Mutual Gains #153 about the fees and a recent warning in Mutual Gains #159. As well you will see reference to it in one of my bLoG posts and referred to on the sign up page for the E-Loop.
If you need to find anything I’ve written in the past, you can do a search directly on the Mutual Gains page (sorry, but only the issues from mid -2003 and later are posted…so far).