Invest in Your Child's Success
Option #1 – Be a Financial Role Model for
your Child(ren).
Pros: Your
children pick up your good (and bad) habits. They get a head start from 90% of
the crowd. Good, quality
Catch: Takes time and effort to learn what
financial strategies work. I discovered that most of the research and
innovative strategies you hear or read about, are just plain garbage.
Fortunately, having an engineering background helped me to shut out a lot of
this nonsense. I am happy to help give guidance on how to have conversations
about money - I also recommend the following financial books - The WealthyBarber by David Chilton, The Richest Man in Babylon by George S. Calson, and
Rich Dad, Poor Dad by Robert Kiyosaki
Option #2a – RESP (Registered Education Savings Plan) – Growth Plan
Pros: Government matches 20%, 30% or 40% and investment
can take advantage of compound growth.
Catch: Grant can
only be used for post-secondary education – you child must use it or lose
it! Also, your child has control of
funds when he/she goes to post-secondary school (do you remember what you were
like your first year of University?)
Option #2b – RESP (Registered Education Savings Plan) – Scholarship Plan
Similar to
Option #1 but different. More rules and
regulations – must pay monthly contributions in most scholarship plans.
Option #3
– TFSA (Tax Free Savings Account) – Must be in Parent’s Name
Pros: Investment can take advantage of compound
growth, Tax Free!
Catch: Limited amount allowed each year. Must be in parent’s name. Easy to access, so it might be used for
emergencies or other events.
Option #4
- Open Market Investment Loan
Pros: Initial investment uses the power of compound
growth. Interest is tax deductible.
Catch: Approval needed. Capital Gains are taxed.
Option #5
– Whole Life Policy (An insurance
policy wrapped around an investment)
Pros: Child can be insured for life. Investment can grow into a retirement
fund. Can borrow tax free. THIS IS HUGE AND MOST DO NOT UNDERSTAND THE POWER OF THIS OPTION!
Catch: Approval
Needed. Monthly premium must be made
until there is cash value in the policy.
Option #6
– Critical Illness Insurance with Return of Premium Policy
Pros: Lump sum payment will be given if child
becomes sick. The lump sum payment is
meant to be used to get better, but it can be used anyway you would like –
grant a wish, pay bills, etc. Return of
investment is guaranteed if you don’t make a claim (which hopefully you won’t
have to).
Catch: Approval needed. Monthly premium must be made every
month. No compound growth.
Now you know your options!! You
have a better chance of success if you understand how to be successful!
If you were to invest $100/month and obtain a 6% rate of return, you’d
be surprised by the value of each option after 15 years. Contact me if you would like to see the
value of each option or learn more.
Steve MacLellan, P.Eng
The Financial Engineer
Phone: 902-240-6508
Email: steve@thefinanicalengineer.ca
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