It’s been a couple of years since my last RESP portfolio update and probably would have been longer if it wasn’t for a reader request for a quick update. Since the last update, there has been a big change. Instead of managing one RESP, now there are two! We have the RESP accounts setup separately, but under a family plan.
The RESP portfolios for our children are setup with TD e-Series mutual funds which provide a low cost way to index the market. I chose to go with mutual funds instead of ETFs as I like the freedom of adding small amounts at a time without having to pay a commission for every purchase.
The long term plan for the RESPs is to be aggressive for the first 10 years (90% equities 10% bonds) with increasing fixed income as the University tuition nears. I copied the table from my RESP strategy article below.
Index 0-10yrs 10-14yrs 14-17yrs 18yrs + Canadian Equity 30% 20% 10% 0% US Equity 30% 20% 10% 0% International Equity 30% 20% 10% 0% Canadian Bonds 10% 40% 35% 0% GIC’s 0% 0% 35+% 75% Money Market Fund 0% 0% 0% 25%
Portfolio totals as of December 7, 2012
First RESP Portfolio (started 2nd quarter 2008):
|TD CDN Money Mkt||250.271||$10.00||$2,502.71||15.23||$2,502.71|
|TD CDN Index-e**||199.392||$19.92||$3,971.89||24.180||$4,053.94|
|TD US Index-e**||149.446||$24.76||$3,700.28||22.520||$3,076.98|
|TD CDN Bond Index-e**||205.104||$11.67||$2,393.56||14.570||$2,339.82|
|TD Int’l Index-e**||449.390||$8.59||$3860.26||23.500||$3,647.16|
|Total as of Dec 7, 2012||$16,428.70||$15,620.61|
Second RESP Portfolio (started 3rd quarter 2011):
|TD CDN Money Mkt||150.932||$10.00||$1,509.32||23.780||$1,509.32|
|TD CDN Index-e**||78.626||$19.92||$1,566.23||24.680||$1,519.57|
|TD US Index-e**||45.955||$24.76||$1,137.85||17.930||$1,007.70|
|TD CDN Bond Index-e**||0||0||0||0||0|
|TD Int’l Index-e**||248.341||$8.59||$2,133.25||33.610||$2,045.02|
|Total as of Dec 7, 2012||$6,346.65||$6,081.61|
We started the first portfolio in early 2008 near the peak of the market so there was a point in early 2009 where the market value of this portfolio was significantly below book value. It’s comforting to see that rebalancing with new money every year has brought positive results. This portfolio is up about 5.2% since inception (not including annual Canadian Education Savings Grant).
The second RESP portfolio was started near mid 2011, which fortunately, was during a market correction. You may notice that this account does not have any bonds. The reason being is that bonds have been fairly expensive over the past year or so, but I will be adding some when the time is right. This account has returned 4.4% thus far (not including annual Canadian Education Savings Grant).
Going forward, I hope to deploy some of the cash as opportunities arise. The cash portion of the portfolios are already relatively high with another cash contribution coming in the new year.
If you have setup an RESP, who is your provider? What is your investment strategy?-> If you would like to read more articles like this, you can sign up for my free newsletter service below (we will not spam you).