Family RESP advice

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Jul 2nd, 2020 8:03 pm

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Jul 1st, 2020 10:19 am

gskn4u [OP]: Sr. Member; Feb 15, 2013; 779 posts; 249 upvotes; Toronto

Jul 1st, 2020 10:19 am

Family RESP advice

Hello All,

I need some help with RESP account. Currently my wife have RESP account (not DI account) for both our kids with RBC and advisor asked to invest in mutual funds (RBC Target 2030 Education Fund; MER 1.98%).

Currently I am looking for other options like moving them to RBC DI or Questrade account.

Is it best move to RBC DI or Questrade (ETF) or TD DI (TD e-Series) ?

currently I am using couch potato portfolio as reference (https://canadiancouchpotato.com/model-portfolios/). We have 2 kids and oldest is 6 years. We live in Ontario province.

The reason I included
1. RBC DI is easy to move. currently RESP mutual fund account is with my wife banking account. I am not 100% sure if we can buy TD e-Series funds with zero commission fee using RBC DI.
2. Questrade due to zero fee commission buying an ETF.
3. TD DI is due to access to TD e-Series with no commission fee.

I would appreciate If anyone has different portfolio recommendation/portfolio suggestion. Please advice.

Thank you.

10 replies

Jul 1st, 2020 10:28 am

llpresident: Deal Addict; Dec 3, 2014; 2021 posts; 1273 upvotes; Ontario

Jul 1st, 2020 10:28 am

gskn4u wrote: ↑ Hello All,

I need some help with RESP account. Currently my wife have RESP account (not DI account) for both our kids with RBC and advisor asked to invest in mutual funds (RBC Target 2030 Education Fund; MER 1.98%).

Currently I am looking for other options like moving them to RBC DI or Questrade account.

Is it best move to RBC DI or Questrade (ETF) or TD DI (TD e-Series) ?

currently I am using couch potato portfolio as reference (https://canadiancouchpotato.com/model-portfolios/). We have 2 kids and oldest is 6 years. We live in Ontario province.

The reason I included
1. RBC DI is easy to move. currently RESP mutual fund account is with my wife banking account. I am not 100% sure if we can buy TD e-Series funds with zero commission fee using RBC DI.
2. Questrade due to zero fee commission buying an ETF.
3. TD DI is due to access to TD e-Series with no commission fee.

I would appreciate If anyone has different portfolio recommendation/portfolio suggestion. Please advice.

Thank you.

I would suggest you just use Wealthsimple Invest for RESP. You will get an automated couch potato type portfolio and the fee is minimal and not terribly significant given the account size of an RESP.

Save the micromanaging for your retirement portfolio where the fees will matter due to the larger amounts and time horizon.

+1

Jul 1st, 2020 10:51 am

dec12: Deal Addict; May 6, 2010; 2847 posts; 274 upvotes; Markham

Jul 1st, 2020 10:51 am

Found out the hard way that self-direct RESP is limited to Canadian stocks!!!

Jul 1st, 2020 10:58 am

fastlayne: Deal Addict; Nov 18, 2007; 3489 posts; 555 upvotes; Valleywood

Jul 1st, 2020 10:58 am

Don't pay 1.98% to anyone.

Stick with the discount brokerages of the big 5. I assume that you have reviewed the comments on Questrade, they seem to have too many screwups.

e-series will only be available with TD.

You could select one of VGRO, ZGRO or XGRO with a change to VBAL, XBAL or ZBAL/ZCON in later years.

Jul 1st, 2020 11:03 am

hammer: Deal Addict; Oct 4, 2001; 1395 posts; 71 upvotes

Jul 1st, 2020 11:03 am

dec12 wrote: ↑ Found out the hard way that self-direct RESP is limited to Canadian stocks!!!

not true

All is not golde that outward shewith bright...lydgate

+2

Jul 1st, 2020 11:03 am

dlhunter: Deal Fanatic; Jun 27, 2007; 5468 posts; 1888 upvotes

Jul 1st, 2020 11:03 am

gskn4u wrote: ↑ I need some help with RESP account. Currently my wife have RESP account (not DI account) for both our kids with RBC and advisor asked to invest in mutual funds (RBC Target 2030 Education Fund; MER 1.98%).

we are with RBC DI for RESP
only CAD denominated account, but you can buy anything you like. RBC will warn you like so

Note: You are placing an order on a USD denominated security to be settled on your CAD account. A real-time conversion of funds will be required. Real-time conversions cannot be cancelled or reversed.

Still, there are plenty of TSX listed etfs that track S&P 500 - VFV, XSP, VSP, etc

It's easy to grin when your ship comes in and you've got the stock market beat.
But the man worthwhile is the man who can smile when his shorts are too tight in the seat 😃

In Fed We Trust - Make ES Limit Down Great Again!

+1

Jul 1st, 2020 1:56 pm

gskn4u [OP]: Sr. Member; Feb 15, 2013; 779 posts; 249 upvotes; Toronto

Jul 1st, 2020 1:56 pm

Thank you all. This is helpful.

dlhunter wrote: ↑ we are with RBC DI for RESP
only CAD denominated account, but you can buy anything you like. RBC will warn you like so

Still, there are plenty of TSX listed etfs that track S&P 500 - VFV, XSP, VSP, etc

Couple more questions.
1. If you buy US stock, will the bank do fx conversion and does it include additional fee apart from fx conversion?
2. do you submit W-8BEN form yearly for US stock with dividends or TSX listed US ETFs?

Jul 1st, 2020 2:56 pm

wakka2u: Deal Addict; Aug 10, 2006; 1524 posts; 805 upvotes

Jul 1st, 2020 2:56 pm

Don't pay 1.98% to anyone.

Stick with the discount brokerages of the big 5. I assume that you have reviewed the comments on Questrade, they seem to have too many screwups.

e-series will only be available with TD.

You could select one of VGRO, ZGRO or XGRO with a change to VBAL, XBAL or ZBAL/ZCON in later years.

i made this mistake with walking into my RBC bank and talking to an advisor who sold me on target 2025 over 10 years ago. Zombie contributing since into this target 2025 fund and into QUEBE US for the past 3 years, i finally made the time to get out of the bank account and do DI.

agree, dont pay MER 1.98 for this fund.. i dont mind paying MERs as long as it is worth it, i dont think target funds is not one of them for a balance fund.

target 2025 Trailing Returns (%) Vs./ Benchmarks
Trailing Returns (%) Vs. Benchmarks
YTD 1.84% vs. 2.71%
1-Month 1.19% vs. 0.82%
3-Month 1.22% vs. 2.71%
1-Year 4.88% vs. 6.88%
3-Year 3.17% vs. 4.65%
5-Year 3.57% vs. 5.49%
10-Year 5.95% vs. 4.32%

Last edited by wakka2u on Jul 1st, 2020 3:32 pm, edited 3 times in total.

+1

Jul 1st, 2020 3:26 pm

Thanh: Deal Addict; Oct 14, 2001; 1670 posts; 478 upvotes; GMA

Jul 1st, 2020 3:26 pm

Questrade or Itrade or National Bank Direct Brokerage are all good options for ultra low-cost ETF-based portfolios.

In your case, I'd use a one-fund-portfolio from either Vanguard, BMO or Ishares. Start with the Growth then transition to Balanced eventually and then the Conservative option. For example, in our case, we use the following approach:
0-10 years old: 100% XGRO
10-13 years old: 100% XBAL
14-17 years old: 100% XCNS
18 and +: Asset allocation TBD, probably 50% XCNS and 50% HISA

+2

Jul 1st, 2020 11:00 pm

dlhunter: Deal Fanatic; Jun 27, 2007; 5468 posts; 1888 upvotes

Jul 1st, 2020 11:00 pm

gskn4u wrote: ↑ Couple more questions.
1. If you buy US stock, will the bank do fx conversion and does it include additional fee apart from fx conversion?
2. do you submit W-8BEN form yearly for US stock with dividends or TSX listed US ETFs?

1. Bank fx rate, you lose 2% conversion. I did this once and learned the lesson
2. I have other accounts and fill out US forms once a year. No big deal

Re: last answer. While i agree on the timing of equity allocation, compare XGRO vs S&P.
I prefer better return, bonds (any) yield almost zero, so why bother. Blackrock/Vanguard mix all kind of garbage into their xgro/vgro products
I am allocating new contributions to canadian preferred shares, some are very undervalued. Stick with big 5 and life cos and maybe utilities for much better return

Case in point: us 10 notes yields 0.6%. Wow
TD preferred rate reset yields around 5-6% depending on the issue. Better deals are life cos/insurance like SLF.PR.A or IFC.PR.I due to NVCC

With BOC 5y at near 0.5%, prederreds have only one way - up. Unless you believe in negative rates

And yes, inflation is already near 2%, what happens when it perks up? Its inevitable given the printing presses

It's easy to grin when your ship comes in and you've got the stock market beat.
But the man worthwhile is the man who can smile when his shorts are too tight in the seat 😃

In Fed We Trust - Make ES Limit Down Great Again!

+2

Jul 2nd, 2020 8:03 pm

bubak: Deal Addict; Jul 15, 2009; 1992 posts; 1118 upvotes

Jul 2nd, 2020 8:03 pm

fastlayne wrote: ↑ e-series will only be available with TD.

e-series are available everywhere starting a few months ago.

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