General consensus around these reps, is they tell you what you want to hear to sell the plan, and leave out key details around fees and cancellation penalties. Personally I wouldn't trust anything they say until you see the specific T&Cs you would be signing up to in writing.canucks316 wrote: ↑Feb 2nd, 2017 9:21 pm1) my wife invited a kff rep to our house who tried to sell us on their flex plan which apparently has front loaded fees and then 1.5% charged to interest earned on principal and grant, and not the total amount sitting in our account. The rep explained that the plan money can be used for even our education if we choose to go back and there would be no fees for taking $$ out. Has anyone else gotten this same explanation and has anyone signed up with this plan and has reviews?
An RESP is not a "use for anything" plan. It's a plan intended to be specifically for a student attending school. Since the student would be withdrawing the RESP in their own name, are usually in full time school so income will be minimal or non-existant, and they have lots of education credits to apply in their tax return... the tax impact for the RESP withdrawals should be minimal or zero. Also remember only the interest earned is taxable, not the deposits.2) what's the difference between saving for education in RESP vs TFSA. both take after tax dollars. Sure you're losing out on 20% match by government, but your withdrawn money isn't taxed (at about 20%) and you can use it for anything. Has anyone looked into this and worked out the benefit of still using RESP vs TFSA?
As long as RESP is used by intended student, the 20% grants plus compound growth on the grants make them superior to a TFSA.
Easiest way is through your regular bank. However as you noted, GICs or mutual funds will be used here. GICs are an awful choice for RESP since it's a bad long-term investment strategy that will barely keep up with the inflation rate meaning you aren't really gaining anything. And mutual funds typically have high MERs in the 1-2% range which is charged on the full value of your investment.3) what's the best / cheapest way to setup an RESP ? through a bank? if so, what do you suggest in terms of investment type? GIC or mutual fund?
3b) on a related note, how do mutual funds get the management fee charged? do they charge on the full growth of your investment? if so, then what's a good management fee % I should be expecting to pay?
A better option is to open a self-directed broker account, and then choose 2-3 ETF funds to buy as your main investments. With each deposit you make to the RESP, you just purchase more shares of the ETFs. ETF fees are typically very low (in the 0.1 - 0.3% range). Personally I use Questrade for my kid's RESP as there is no cost to purchase ETFs.