• A few years back, my husband and I adopted a little girl.  She was three at the time and has various health issues.  She is now eight and doing well, however my constant worry as a parent is for her financial future.  With her present issues, we are unsure of whether she will be able to work and support herself financially.

    When we adopted her, we put in place a RESP and looking back I’m glad I stopped contributing when I did as I could never save enough for her future with the ridiculous interest rates we were getting not to mention the fees.

    This last year has been an eye-opener and after doing the math I can definitely be assured that her future will be secure, as I have established a plan by investing in Syndicated Mortgages at a fixed rate of 8% per year.  On top of that, after the 5-year term, there is the possibility of receiving developer profits.  The average per year usually turns out to be 10.25% and the best part is there are no fees!

    Syndicated Mortgages Vs. Resp


    But let’s look at parents with young children, who will one day grow up to be financially secure- will they have enough for their children’s education?

    According to BMO, 83% of Canadian parents expect to pay for their child’s post-secondary education; but the cost continues to rise. A four-year university degree is expected to cost as much as $60,000 and that sum could rise to more than $140,000 for a child born this year, BMO says.

    RESP’s have for the longest time been the only option for parent’s to save for their children’s education.  Parents believe that, on average, their RESP will be worth almost $28,500 when their children need it, a recent RBC survey revealed. But, as most parents start RESPs when their child is 2 years old, their RESP will typically be worth $22,500 by the time their child is 17 — a shortfall of $8,000.

    When we look at an RESP vs. investing in Syndicated Mortgages let’s do the math.

    Syndicated Mortgages

    • Start with $30,000 (taken from Savings or Home Equity)
    • Interest rate – fixed at 8%
    • Term 5 years
    • NO fees ever

    Let’s say you start saving for your child or children at the age of 3.  That gives you 15 years to save.

    After 15 years you have a whopping $66,000 (initial $30,000 + $36,000 in interest earnings).

    With Syndicated Mortgages you may not receive government grants but the fact that you pay no fees to invest, is more valuable to your growth.

    Furthermore, your children can use the money to fund their education, travel, purchase real estate or start a business.


    The average parent contributes $1,500 per year for their child and if they have more than 1 child that amount drops as they have to spread it amongst all the children.  Furthermore, in order to get the Government savings grant of $500 per year, the parent must have contributed over $2,500 per year per child.  How is that possible these days with the high cost of living?

    For this example we will start at the age of three and we will look at

    Interest rate – 4.82% (taken from TD eFunds chart below)*

    MER’s (Management Expense Ratio)– 0.50%

    $1500 contributed per year over 15 years.

    Historical Performance (%)

    Performance as of Sep 30, 2015

    1 Mo 3 Mo 6 Mo 1 YR 2 YR 3 YR 5 YR 10 YR Inception Inception Date
    -0.29 0.08 -1.74 4.82 5.36 2.93 3.96 4.42 5.37 10/10/2000

    So at the end of 15 years, you would have $49,391.80, which is a shortfall over $10,000.  This takes into fact a decent rate of return and a lower MER, but what happens when you invest with a lower rate of return and higher MER? – the picture does not look any better!

    RESP have traditionally been the vehicle of choice but when you do the math, there are better options out there to consider.

    Furthermore, with RESP’s you must have one plan per child and not all schools are eligible for the plan.  With Syndicated Mortgages, you can spread the cost over all children and they can choose to go to whichever school they wish.

    Already have RESP’s set up but not getting the returns you imagined?  Syndicated Mortgages can be set up with RESP’s as well as other registered funds.

    Do your math and make the right decision – it could mean having enough at the end or facing a shortfall!

    Reach out today – let’s have a no-obligation chat about the returns you are getting vs. the returns you will need to fund your child’s education!