Q: I’m planning on opening an RESP for my son William. Should I just open one at my bank? I’m not sure what distinguishes one bank’s offering from another’s.—Emily Johnson-Bellotto, Montreal
A: Your son is unlikely to thank you for this—either because he’s an infant and can’t form the words, or he’s a teen and can’t remember the words. So I say thank you Mom, on his behalf. Contributing to a Registered Education Saving Plan (RESP) is a brilliant investment, in large part because the government grant provides you with a guaranteed return of 20%. I would stick with your bank because it’s easier to see everything in one place and set up a monthly automatic transfer from your chequing account to your RESP. Besides, an RESP is just an account and the banks’ offerings don’t differ much. That said, the returns on investment products do differ, so pay careful attention to what you invest that money in. Low-cost mutual funds are a good bet, to minimize the impact of fees on your return. And if your son is younger than, say, 10 years old, you can stay mostly in equities, increasing your fixed-income position as he gets closer to needing access to the money for the requisite books (and beer).
Bruce Sellery is a frequent guest on financial television shows and author of Moolala. Do you have your own personal question? Write to Bruce at firstname.lastname@example.org.