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The bills come due for this year's university and college tuition just as the stock market heads into the historically treacherous month of September.
Memo to parents with registered education savings plans for their children: Do not put yourself in a position where a stock market correction can decimate the money you've been putting away for years.
I outlined my general philosophy for RESP investing in an early 2014 column. Now, let me show you how I've positioned the plan my wife and I have for our two sons, one of them is 20 years old and entering his third year of university and the other is 17 and entering his final year of high school.
In the interest of safety, I've pretty much given up on growing the assets in the account in any significant way. Funding for my oldest son's 2014-15 needs is sitting in cash, waiting for our online brokerage firm to transfer the money into our chequing account (required forms were mailed on Aug. 18).
Next year's funding for our oldest son is sitting in an investment savings account currently yielding 1.25 per cent. That's a pitiful return, but I'm OK with it because there's zero risk. My 17-year-old will be starting college or university that same year and his first-year money is also safely parked. It's sitting in a guaranteed investment certificate that matures in the summer of 2015 and will deliver a yield of just under 2 per cent. Again, safety ahead of growth.
A small amount of money remains invested in BCE Inc. shares, which are paying us dividends yielding roughly 10 per cent based on the amount we invested many years ago. I figure that money can sit tight until my youngest son's second year of university or college. Then we'll sell and lock that money down in something safe.
We're still saving for our second son's post-secondary education. The amount of risk we'll be taking with that money as we accumluate it: Zero. Risky RESPs are for parents with kids in grade school or younger. I'll write more about this soon.