本文发表在 rolia.net 枫下论坛Answers to how to crash the lies of a pooled resp (cst, usc, etc.) salesperson:
by m2001 (noname?) at 2003.1.31 15:13
Q1. We only invest in government bonds, which are safe and guaranteed. ==> Only the bond principal and interest is guaranteed - do not confuse with the total investment return. You still face interest rate risk. When interest rates go up (now it is nearly zero, the only way it can go is UP), bond fund will lose money. If interest rate stay the same (stay low at current level), you cannot have a high return.
A1:The pooled RESP is not only invest in government bonds, other choices are: (1)Debt securities(20% max in Variable Rate Securiteis) issued or guaranteed by government; (2) First Mortgates (3) Government T_Bill; (4) GIC; (5) Debt securities by AAA Public Corporations.
Don’t understand why bond fund will lose money, after interest goes up. The interest rate was mostly up in the past 30 years.
Q2. We have over 10% historical return. ==> That return has to be put into the historical context - In the 80s interest rates were over 10%. Now it is way lower. The historical performance is also partly due to the number of drop-outs from the pool. If I take the CESG grant of 400 into the picture, and if I invest 2000 per year, I get 20% automatically. No bond investments can beat 20%.
A2:You are correct: (1)over 10% is just a Historical return, and nobody (unless he lies) can guarantee the return of the investment, except GIC; and (2)No bond investments can beat 20%.
Q3. We are non-profit. ==> That doesn't mean you are efficient. Typically, non-profit organisations are not as efficient as private entities.
A3: Do you know how much the CEO gets from the company? In some dot com companies, they take as much as 50% of the profit into their own pocket. And it’s legal --by law.
In this non-profit Foundation, all the Chairman and Directors are volunteers, they don’t get a cent from the parents.
My personal guess is that they are already rich enough, and don’t care about the money. Same reason applies for those donations, which Chinese people don’t understand at all.
Q4. Please clarify the following:
A4: Sure, here they are:
-If my child doesn't go to a qualified university/college, I will lose the CESG grants and all investment interest, and I cannot roll over it into my RRSP like I could if I were to have a self-directed RESP.
In case of your child doesn't go to a qualified university/college, you may lose the grants, but not necessary for your investment interest. You have the following choices:
(1) Transfer to other children. Nothing to lose, neither the CESG.
(2) You are encouraged to transfer them into your RRSP(& Spouse’s RRSP), and the limit is $50,000.
(3) Or, receive the Accumulated Income Payment, which will be taxed at your marginal tax rate plus an additional tax of 20%.
-If I quit the plan before it matures, I will be charged membership fee and all interests are gone.
You will lose the membership fee and the interest from the CESG, but you can keep the interests from the principal, and you need pay tax on your behalf.
-If my child only finishes 1 year of college, I will lose the payout for the rest 3 years. My child has to finish all of the 4 year education to get all the promised income. I don't have the flexibility to decide how to withdrawl funds like I would have in a self-directed plan.
Your child need enroll in a post-secondary school for at least 3 weeks to qualify the scholarship in each of the rest 3 years. If the child refuse to take a 3 weeks course, the money is lost.
-You cannot guarantee 10% return. The 10% return in your brochure are historical returns, future return will depend on future interest rates and the number of people quitting the plan.
Nobody can guarantee the return of the investment. For the pooled RESP, there is another item affects the total return: Donation. For example, (1)BMO credit card, (2) C.S.T. EDUCATION CHARITY (3)….
-How much commission you get from selling each unit :-)
The commission depends on the level of the agent, and I am not the right person to answer this question, maybe I can tell you in private. -:)更多精彩文章及讨论，请光临枫下论坛 rolia.net
by m2001 (noname?) at 2003.1.31 15:13
Q1. We only invest in government bonds, which are safe and guaranteed. ==> Only the bond principal and interest is guaranteed - do not confuse with the total investment return. You still face interest rate risk. When interest rates go up (now it is nearly zero, the only way it can go is UP), bond fund will lose money. If interest rate stay the same (stay low at current level), you cannot have a high return.
A1:The pooled RESP is not only invest in government bonds, other choices are: (1)Debt securities(20% max in Variable Rate Securiteis) issued or guaranteed by government; (2) First Mortgates (3) Government T_Bill; (4) GIC; (5) Debt securities by AAA Public Corporations.
Don’t understand why bond fund will lose money, after interest goes up. The interest rate was mostly up in the past 30 years.
Q2. We have over 10% historical return. ==> That return has to be put into the historical context - In the 80s interest rates were over 10%. Now it is way lower. The historical performance is also partly due to the number of drop-outs from the pool. If I take the CESG grant of 400 into the picture, and if I invest 2000 per year, I get 20% automatically. No bond investments can beat 20%.
A2:You are correct: (1)over 10% is just a Historical return, and nobody (unless he lies) can guarantee the return of the investment, except GIC; and (2)No bond investments can beat 20%.
Q3. We are non-profit. ==> That doesn't mean you are efficient. Typically, non-profit organisations are not as efficient as private entities.
A3: Do you know how much the CEO gets from the company? In some dot com companies, they take as much as 50% of the profit into their own pocket. And it’s legal --by law.
In this non-profit Foundation, all the Chairman and Directors are volunteers, they don’t get a cent from the parents.
My personal guess is that they are already rich enough, and don’t care about the money. Same reason applies for those donations, which Chinese people don’t understand at all.
Q4. Please clarify the following:
A4: Sure, here they are:
-If my child doesn't go to a qualified university/college, I will lose the CESG grants and all investment interest, and I cannot roll over it into my RRSP like I could if I were to have a self-directed RESP.
In case of your child doesn't go to a qualified university/college, you may lose the grants, but not necessary for your investment interest. You have the following choices:
(1) Transfer to other children. Nothing to lose, neither the CESG.
(2) You are encouraged to transfer them into your RRSP(& Spouse’s RRSP), and the limit is $50,000.
(3) Or, receive the Accumulated Income Payment, which will be taxed at your marginal tax rate plus an additional tax of 20%.
-If I quit the plan before it matures, I will be charged membership fee and all interests are gone.
You will lose the membership fee and the interest from the CESG, but you can keep the interests from the principal, and you need pay tax on your behalf.
-If my child only finishes 1 year of college, I will lose the payout for the rest 3 years. My child has to finish all of the 4 year education to get all the promised income. I don't have the flexibility to decide how to withdrawl funds like I would have in a self-directed plan.
Your child need enroll in a post-secondary school for at least 3 weeks to qualify the scholarship in each of the rest 3 years. If the child refuse to take a 3 weeks course, the money is lost.
-You cannot guarantee 10% return. The 10% return in your brochure are historical returns, future return will depend on future interest rates and the number of people quitting the plan.
Nobody can guarantee the return of the investment. For the pooled RESP, there is another item affects the total return: Donation. For example, (1)BMO credit card, (2) C.S.T. EDUCATION CHARITY (3)….
-How much commission you get from selling each unit :-)
The commission depends on the level of the agent, and I am not the right person to answer this question, maybe I can tell you in private. -:)更多精彩文章及讨论，请光临枫下论坛 rolia.net