Registered education savings plan

...

in interviews about only six months, eight months, maybe 10 months ago, Mo and I were asking some fairly basic questions of ChatGPT around RESPs.

Mm.

And it had some truly horrible answers for whatever reason.

With life insurance, I would say you certainly see people that are under-insured from a life insurance perspective, and life insurance, particularly term life insurance, is relatively cheap to buy.

Yeah.

I see, certainly see people who have fancy life insurance who should not, who've not maxed out RSPs and TFSAs and RESPs and done other things in their life that they should've done, because fancy life insurance is, I think, beneficial for a very small part of the population.

But disability insurance, that's definitely where I see the biggest gap.

So is this an accident or is it by design? How does this program even work? Why do half the kids in this province never see a dime of it? And I'll break down why the whole thing should be scrapped.

The BC Training and Education Savings Grant, also referred to as the BCTESG, is $1,200 deposited by the province into a Registered Education Savings Plan, also known as an RESP, for your child's future post-secondary education, university, college, etc.

Now, where did this thing come from? This was, of course, a Christy Clark program.

Her government announced it in a pre-election budget back in 2013 and rolled it out in 2015.

But because the federal government says if you don't have a SIN, you can't have an education savings account.

Step two.

So now that you've got your SIN, you've got to go to your bank or credit union or your financial advisor and open up a registered education savings plan.

And right there, before a single form is filled out, the program has already picked its winners.

Oh, I've been doing a lot over my years with kids and that.

I'm doing RESPs and stuff.

I have...

I have a considerable amount available still in my RRSP.

Think about retirement.

If you have kids, what about them going to school, daycare, childcare, medical bills? What about buying a home so you can pass it on to your kids? Building up their RESP, for example, in Canada.

Buying your life insurance, disability, critical illness.

There's so much you can do for yourself, but instead of putting money into the things for ourselves, we put it into working with other people, and we call that reinvesting in the business.

But do we want to get out of the portfolio or to get out of the market altogether to get back in? Timing markets never, ever works.

next chart or a next uh i guess yes it is a chart shows all the different types of investments that one could choose from there you go stocks and preferred shares and bonds and flow through shares which we don't talk about often they are a good uh good investment at times for a tax deduction RRSP and leverage loans, RESPs, mutual funds, IPOs, GICs, you name it.

All these investments are what we can choose from with respect to your portfolio.

But keep in mind, asset mix makes up about 90% of an investor's return.

It's, uh, we set up our kids from quite a young age with different investments.

I mean, we obviously set up things like RESPs, max those out, and then now our oldest, you know, she was able to then open up her TFSA and start, she did these regular contributions.

And we have, like, it's regular, you know, chatting here in our house about-

Always

Knock off that line of credit, you know, all these kinds of things.

In our case here, we've had a lot of priorities personally and in the business where we haven't set up our ESPs for our kids, it wasn't top of the priority list necessarily, but part of our savings letter is, cash, we're going to send some of that over to RESPs to get the kit set up.

It was something we knew we wanted to do, but now that we were able to push a little bit harder through this, we'll be able to set that up and then set aside a little bit of extra cash too for a vacation that we had in mind with some friends to make that decision a little bit easier too.

So it's not a It required a lot of mental load that wouldn't be sustainable long-term, but was it stupid and a waste of time and energy? I also don't think it was, but

Well, this week's episode, we are very excited to have a special guest.

Sam, we just finished up a great conversation with Moira Rose about group RESPs.

What did you think?

Oh, I thought it was a very insightful conversation.

So perhaps maybe you could, you know, flip the coin a little bit and like, do you have any ideas why these plans sound so appealing to new parents or is there something that's, that's in there that sounds really attractive? Is it that like dropout opportunity perhaps that,

I don't even think people understand that.

In fact, I think the way to understand the appeal of group RESPs is actually to kind of go right to the beginning, which is when do people get sold them? So these companies tend to be quite predatory around new parents.

And so there have been lawsuits.