InvestorsFriend Inc. Newsletter June 8, 2014
The $100,000 (per kid) RESP
Back in 2007 I said that it was quite reasonable to expect that if an RESP was started soon after the birth of a child, and funded at $2000 per year, this could grow to $100,000 or more by the time the child is in university.
At the end of 2007 my two children were ages 11 and 12. And their (joint) RESP was sitting at $36,387 each. So, I was a long way from $100,000 each. The money was invested mostly in equities (with some cash for stability and opportunities) and I added to it each year.
This week, amazingly enough, the account did hit $100,299 per kid. This includes $10,000 that had been withdrawn for the eldest of the two.
In total from 1998 to 2012, I contributed $34,142 per child. The government grants amounted to $6,412. The remaining $59,745 per child has come from stock market gains. Basically, I contributed enough to get approximately the maximum 20% grant each year.
So, in my experience it was possible to get to $100,000 per child. I did not invest a penny in “safe” bonds or interest-bearing accounts. I was invested in a handful of stocks that I had confidence in, along with usually a modest amount of cash.
The particular stocks owned, at particular points in time, were as follows :
mid 2008 – Tim Hortons, Western Financial Group, Wilan, TSX Group, and Melcor
mid 2009 – Western Financial Group, Wilan, Melcor, AeroPlan, First Service Preferred, and Dalsa
mid 2010 – Melcor, Shaw Communications, Walmart, Berkshire Hathaway and Visa
mid 2011 – Melcor, Walmart, Berkshire Hathaway, and Canadian Tire
mid 2012 – Melcor, Walmart, Berkshire Hathaway, Canadian Tire and Toll Brothers
mid 2013 – Melcor, Canadian Tire and Toll Brothers, Canadian Western Bank, and Bombardier
Today – Melcor, Toll Brothers, Wells Fargo, and Enbridge Preferred Shares.
The cash position is unusually high at this time, at 42%.
It can be seen that the portfolio was concentrated in just a few stocks. There were no penny stocks and no energy or resource stocks and no “tech” stocks. The stocks held tended to be relatively boring companies. There was some trading but certainly the trading was not done at a frenzied pace at all.
Valuation of the Toronto Stock Exchange Index
Our reference article that attempts to determine if the Toronto Stock Exchange Index is an attractive investment at a point in time has been updated.
Canadian Exchange Traded Funds
Our reference article that provides a list of Canadian Exchange Traded Funds along with fundamental data such as the P/E ratio, the dividend yield and the price to book value ratio has been updated.
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Shawn Allen, President
InvestorsFriend Inc.
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