Parenting & Family

Canadian Scholarship Trust

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  • Aug 14th, 2014 9:50 am
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Sr. Member
User avatar
Jan 8, 2009
830 posts
66 upvotes
GTA
If you are sticking with the scholarship type plans, than Heritage would be the better choice.

There are other self-manage options out their. Check with your Bank or Trading partner.
Insurance & Financial Advisor

All posts on this forum are for information purpose only and can't replace your policy contract. Please contact your own broker, agent or company before acting on my suggestions. There is more to insurance than just price!
Newbie
Jan 26, 2014
1 posts
1 upvote
elnino wrote: Hi, just wondering if the Canadian Scholarship Trust is the best place to put my RESP for my child over 20yr period? If you know some where else that has a higher return or more stable would love to hear and study up on it. Thanks
Perhaps one of the most important things to keep in mind with CST is that, unlike the banks, it is a not-for-profit. Because it is not profit driven it is more competitive, while providing a high level of investment safety. Mutual fund fees over the life of a typical plan are about 3 times the fees of CST's, and CST returns at least half of its fees to the parent. On a personal note, it assisted me earning two degrees so I tend to be thankful that the option was there when I was younger.
Deal Addict
May 31, 2009
2623 posts
162 upvotes
DrXenon wrote: Image
LOL, you only made $3000 in over 12 years?!? HAHAHAHA.
My kids RESP made over 5k in the past year. 20% gain in 1 year.
Deal Addict
Mar 10, 2010
1595 posts
589 upvotes
Crinkle_cut wrote: LOL, you only made $3000 in over 12 years?!? HAHAHAHA.
My kids RESP made over 5k in the past year. 20% gain in 1 year.
That's his point. CST is a scam that he got locked into. By posting that information hopefully nobody else falls prey to the scam they operate!
Deal Addict
Mar 10, 2011
2583 posts
798 upvotes
Toronto
DrXenon wrote: Perhaps one of the most important things to keep in mind with CST is that my 14 year old could have done a better job of managing this money than CST did. The S&P 500 yielded 40% in CAD terms last year, and if I had opened a bank RESP back then, I would have captured some of that because I would have been in an S&P 500 index fund.

What happened instead? Well, what happened instead is this statement today that indicates after more than a decade I still haven't made my management fees back. In other words, after inflation and management fees, I have lost money.

So, now the question is, do I feel lucky? Do I feel that a lot of people dropped out because of the recession? I sure hope so, because the 100% bond strategy is not exactly working out, is it?

Image
That's too bad DrXenon. My kid is a couple of years older than yours, but I started the RESP a couple of years late so we have a similar timeline for contributions and investment returns. Mine is with a regular bank and I made that decision after evaulating the options of bank or group plans(and asking group plan salespeople what if scenario questions and not liking the answers).

Investments have been a hodge podge of whatever I thought was right and reasonably safe at the time. Initially, GICs were paying great so that was it for awhile, but later went into conservative mutual funds when interest rates went south and now have migrated a good portion back into GICs approaching the years of withdrawal. I'm satisfied with the returns. My totals are as follows:

Contributions: 25,600
CESG: 5,125
Returns (Contr & Grant): 14,773
Plan Balance: 45,498

Just curious...did the brochures or any of the sales materials that the sales person gave you, mention anything about projected returns etc?
if yes, I would be calling them and asking for an explanation.
Deal Expert
Oct 6, 2005
16872 posts
2557 upvotes
Joshua83 wrote: Perhaps one of the most important things to keep in mind with CST is that, unlike the banks, it is a not-for-profit. Because it is not profit driven it is more competitive, while providing a high level of investment safety. Mutual fund fees over the life of a typical plan are about 3 times the fees of CST's, and CST returns at least half of its fees to the parent. On a personal note, it assisted me earning two degrees so I tend to be thankful that the option was there when I was younger.
... Looks like a shill - single and only post. Hmmm....

Bank RESPs are the way to go. No lock in, low fees, and more transparent than these RESP programs.
Moderator
May 28, 2012
12485 posts
5278 upvotes
Saskatoon
coolspot wrote: ... Looks like a shill - single and only post. Hmmm....

Bank RESPs are the way to go. No lock in, low fees, and more transparent than these RESP programs.
I can't imagine in this day and age, where all the information is out there, that someone would actually buy into this scam. Even with shills coming here and praising CST, it is still overwhelmingly negative for these group plans.

I know years ago, there wasn't a lot of choice, it was easier for companies like this to reel in suckers...but seriously, do an internet search and it quickly becomes apparent that this is not a good option.
Deal Addict
May 31, 2009
2623 posts
162 upvotes
DrXenon wrote: No idea if any promises were made, Biff. CST was recommended by my wife's employer and we accepted the recommendation. It was not until I noticed the absence of returns that I found out they invest almost exclusively in government bonds. There doesn't seem to be any prospect of catching up given the current economic situation.

I think I can wind up the plan today and be left with a $34k paid-up plan if I forfeit about $1500 in enrolment fees. Not sure what happens to the CESG, though, I will have to look into that. I am currently investing $450 per month in this plan and it is looking more and more like I am sending good money after bad.
When interest rates eventually go up ( in 3 yrs time), bonds are gonna plummet!! What will that do to your investments?!?
Deal Addict
User avatar
Jan 23, 2007
1039 posts
160 upvotes
Kingston, Ontario
elnino wrote: Hi, just wondering if the Canadian Scholarship Trust is the best place to put my RESP for my child over 20yr period? If you know some where else that has a higher return or more stable would love to hear and study up on it. Thanks
F-ing RUNNNNNN as fast as you can away from them! Way too many stipulations, your child will likely not get their money when they need it. Read up on RESP's, a good site to read up on them is canadianmoneyforum dot com to read about RESP's. We self direct our RESP's, a decision made after so many private scam companies (such as the one you listed above) look at parents wanting to "invest" in their children's education as people to take advantage of.

Good luck whatever you decide, but I urge you to not use a private trust fund or private investment company for RESP's.
Newbie
Aug 8, 2014
1 posts
Toronto, ON
Adding my actual experience with CST RESP - sorry for the length of this post, but hopefully it will help others in making an RESP decision. Our oldest son was born in 1994 and my wife and I purchased two different CST plans (founders plan, group plan). When we purchased these plans, RESPs did not exist in their current form and neither did the government Child Education Savings Grant (CESG)!

The founders plan was aimed at our oldest child going to university - if he did not go to university, we would forfeit the interest income earned over the years. If he did go to university, the returns would be amplified to cover the expected cost of university (as a previous poster said, the 28% top-up bonus amount would come at the expense of others).

The group plan was so that if our son went to college (instead of university), he would receive some money.

My wife and I both are university graduates, so what was the chance that our son wouldn't go to university or college?

Some years later, the government changed the RESP rules, began offering incentives (CESG) for parents to save for their children's post-secondary education, and the Banks started offering much more flexible plans than CST. We had two more children, and we setup a self-directed RESP plan with TD Canada Trust.

Fast forward to our oldest son nearing high school graduation - became obvious to us that he would not be attending university, and possibly not college either. FEAR - CST Founder and Group plan would be mostly a wasted investment. Thankfully, however, CST improved the flexibility of these old plans to allow us to switch into a family plan and add all 3 boys as possible beneficiaries. We did forfeit the return of the enrollment fees ($800) in doing the switch.

Son 1 - did not go to university or college
Son 2 - is starting university in Sep 2014
Son 3 - is in Grade 10 and likely will go to university (fingers crossed)

CST Plan investment
- Contributed $768 per year for 5 years = $3,840.00
- Enrollment/depository/service fees = $ 959.64 ($800 enrollment fees, 159.64 in depository/service charge fees)
- Remaining Contribution amount = $2,880.36
- Current value of the family plan = $6,705.45

What was the CST compound annual growth rate?
- based on the $3,840 invested for 15 years = 3.8% compounded annually (to check 3,840 x 1.038 power of 15) = 6,718
- based on the $2,880 invested for 15 years = 5.8% compounded annually (to check 2,880 x 1.058 power of 15) = 6,710
- 3.8% figure is quite poor, the 5.8% figure seems a reasonable return (but it is not reality)
(compounded rate is over-estimated, but too lazy to do the math with some money earning interest for 20 years, not 15)

Why Did We Switch to the bank RESP (TD self-direct RESP)?
- CST was run too much like the old guard bloated mutual fund industry
- High Front-load fees for enrollment (in our case $800 out of a total $3,840 investment)
- Other fees totalling 159.36 deducted from returns
- An very conservative investment portfolio not likely to outperform (but safe and not likely to lose principal)

This was a good decision on our part as the CST total value will not pay for even 1 year of university tuition
The assets in our TD RESP will cover 5 years of tuition

Overall, we have covered almost (but not quite) 6 years of tuition between CST & TD RESP.

So, long story short, I believe the bank RESPs are a better was to go.
Newbie
Aug 20, 2014
21 posts
9 upvotes
Madden, AB
Hello everyone,

I posted another thread elsewhere, but maybe someone can give me a quick answer here. We are looking to hear back from the CST representative as of yet. Anyways, we opened a group CST plan for our daughter 6 months ago, and have contributed $1200 thus far. There are "sales fees" totaling $4400 for which a balance of $3200 is left. We don't agree with the unethical practices of this plan and even if we stuck it out until the end, would not feel good at all about profiting in any way from other people who had to drop out and lose money.

At this point, we just want to make a clean break, even if it just means sacrificing the 1200 bucks. My question is, do we have to pay the remaining $3200 in "sales fees?"

Thanks for any feedback.
Newbie
Aug 11, 2014
8 posts
1 upvote
Maple Ridge, BC
I have had CST RESPs for all 3 of my kids. The oldest is one 27 middle child 23 and the "baby" is 17. The oldest didn't go to school and so we transferred his plan to the middle child. No problem and no fees for doing this. She went to one yr of college and lasted a week. We got all of the principal back and the fees and one Payment for college. So about 1/4 of the interest it had earned plus top up so far. She has been waitressing for 3 years now and just called me to say she thinks she should go back to school. I called them thinking it had been too long since I let them know what she was doing but to my surprise no problem! Any time she wants to go back and retake 1st yr or just go part time she can. And get the next payment for school. I knew we could take out all of the interest and principle if she didn't go (or transfer it to another child) but I didn't realize she could wait this long between study years. I am posting this because happy customers don't generally take the time to post on these forums, just the unhappy ones. Many times we missed making the deposits but made them up with much flexibility. One time they asked if if I wanted to increase my monthly contributions by $20/ month for 5 months to make up the $100 I missed. Another time I asked about quitting the plan for financial reasons and they said I could get full credit for the amount I had contributed to date, stop making further payments and leave it there until my daughter was ready to start school.This was so I wouldn't lose any grant. I suppose there are people out there who don't follow up with things and I can see how you could loose your fees if you didn't, but I work for a bank and I know they charge fees too and you never get them back. And if she goes this year and gets her second payment we will break even with my banks GIC. Anything after that is gravy. So yes I am very happy with my CST plans.
Deal Addict
User avatar
Sep 30, 2003
3906 posts
130 upvotes
Toronto
DO NOT USE THIS

If you are a parent, there are way better options for your kid's RESP!
--
There is no happy ending

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