As we head into mid-August my wife and I have started to look at the back-to-school lists that came home with our kids at the end of June. We like to freelance a bit from the recommended list of supplies, especially if we can find deals on similar items early in the summer.
We utilize the Flipp app to check out the latest store flyers and compare prices on everything from stationary, electronics, facial tissue, and more. From there, my wife usually takes over (she loves back-to-school shopping with the kids!) and rounds up all the items to try and save the most money. That means buying in bulk when the supplies on our kids’ lists overlap, shopping at multiple stores, and even ordering online.
Another way to save money during the busy back-to-school season is by cashing in rewards points, or leveraging your rewards program to get deals on the stuff you need to buy anyway.
I’m an RBC Rewards member and I noticed they are offering a number of exciting deals for clients from now until August 26, 2018, including savings on the latest tech, merchandise, gift cards and more.
You don’t have to be a student to take advantage of great back-to-school deals. RBC Rewards gives you the flexibility and choice to redeem points at back to school time for whatever they want – or whatever you want.
Visit rbcrewards.com to get back to school deals without the hassle of going back to school.
One smart redemption option that I wasn’t aware of is the ability to turn your unused RBC Rewards points into financial rewards, including contributions to your RRSP, RESP, or TFSA – even to pay down your mortgage or line of credit.
From August 13 to 26, 2018 you can get 20% more in value when you redeem your RBC Rewards points for contributions towards your RBC RRSP or RESP.
That means you can redeem a minimum of 10,000 RBC Rewards points (worth $100) to contribute to an RRSP or RESP, and then contribute in increments of $25 or 2,500 RBC Rewards points after the $100 minimum.
Imagine you’re sitting on 100,000 RBC Rewards points but you don’t have any immediate travel plans for which to redeem them. Instead of cashing in your points for electronics or merchandise, turn your point stash into a $1,000 RRSP contribution!
This Week’s Recap:
This week I wrote about why you should avoid group RESPs and scholarship trusts, and instead set up your RESP at a bank or credit union.
Many thanks to the Globe and Mail’s Tim Kiladze for interviewing me for his latest piece on the bizarre Aeroplan saga – this one about TD’s puzzling message to its cardholders slamming Aimia’s decision to reject the Air Canada led takeover bid. For Globe subscribers only.
Next week I’ll review a new entrant into the robo-advisor space that ticks all the right boxes for me: ultra-low cost, simple portfolio construction, and hands-off, automatic investing.
I’ll also have a mortgage renewal update in my Smart Money column at the Toronto Star. My mortgage comes up for renewal September 1st.
U.K. Trip Update
I revealed last week that we’ve book flights to Scotland for our dream family vacation next summer. We still have lots of details to fill in but we were excited to find and book an Airbnb for seven nights in Inverness. Check out that view!
Over the next two weeks I hope to book our return flights home from Dublin and secure hotel accommodation in Edinburgh. What’s the hold-up? I’m waiting for:
- United Airlines to release its inventory for our mid-July return home. They open up their flights 330 days out, so I should start to see something in our desired date range in the next 7-10 days. We’re hoping for business class seats.
- Marriott and Starwood to merge rewards programs. Marriott purchased Starwood Hotels a couple of years ago and they’re merging the two loyalty programs on August 18th. Once this happens I’ll look to redeem points for free nights in Edinburgh.
I’ll keep you posted when we have any more significant updates to share about our trip.
Weekend Reading:
Reporter David Lazarus kept a Nigerian scammer on the hook for weeks to uncover the lengths to which they’ll go to swindle people out of thousands of dollars. A lively read!
How much money will you need after you retire? Likely much less than you think.
Steadyhand’s Tom Bradley explains why you should embrace ignorance when investing:
“The next time your adviser or portfolio manager wants to make a change based on an economic view or market action, push the pause button. Ask about his long-term track record on such calls and if you get a soft answer, suggest he too embrace his ignorance.”
Two professors issued a challenge to behavioural economists suggesting that their biggest idea is not correct. Barry Ritholtz counters this and explains why loss aversion isn’t dead.
Cleveland Browns defensive end Carl Nassib gives his teammates a lesson on compound interest and the tyranny of fees.
A Wealth of Common Sense blogger Ben Carlson does his best Morgan Housel impression with this terrific take on the layers of the brain.
Speaking of Housel, here’s his latest post where he tries to explain the often irrational and bizarre behaviour of Tesla CEO Elon Musk.
You probably haven’t talked to your grown kids about where you bank, how much you’ve saved, and other key details. Here’s why it’s urgent.
Kristine Hayes lists her five money mistakes (really, only five? I’ve made many more over the years). Here’s a big one:
“It wasn’t until I was 45 years old that I became aware of the importance of being financially literate. Educating myself at a younger age would have saved me from some of the mistakes I made. It also would have increased the likelihood that I could retire at a relatively early age.”
Relevant to me right now is this piece by RateSpy’s Rob McLister who explains how to determine when you’ll pay more for a mortgage.
Common Sense Investing’s Ben Felix gives a thorough analysis of holding a mortgage alongside an investment portfolio and why you should consider a higher equity allocation if you carry mortgage debt.
Finally, the Star’s Kerry Taylor shares the ins and outs of Registered Disability Savings Plans (RDSPs) – a difference maker for Canadians with disabilities.
Have a great weekend, everyone!
Most parents should know that contributing to an RESP is a great way to save for your child’s education. But there’s one type of plan that gives RESPs a bad name. Group RESPs, or group scholarship trusts, are heavily marketed to new parents and immigrants at doctor’s offices and trade shows. These RESP dealers employ commission-based sales representatives to aggressively promote and sell their products. The firms are small, lightly regulated, and their salespeople may often cross ethical lines.
One of the more egregious violations took place in Toronto where a hospital clerk admitted to stealing more than 12,000 confidential maternity patient records and selling the information to an RESP dealer representative at Knowledge First Financial. She was fined $36,000.
Group RESPs also come with a long list of fees and complex rules. An investigation by the Toronto Star into Heritage Education Funds, one of the largest group RESP providers in Canada, found close to 500 complaints from customers who lost all or some of their contributions for violating contribution rules.
In January 2018, Knowledge First Financial purchased Heritage Education. Birds of a feather…
Avoid Group RESPs and Scholarship Trusts
Let’s be clear that group RESPs aren’t necessarily a scam – they’ll work just fine if you see the plan through to the end – however parents need to be cautious and read the fine print before signing up.
The flexibility of a group RESP is much different from the individual or family plans offered by your bank or credit union. Here’s how they work:
With a group RESP, your contributions are pooled with those of other people. The money your child gets is based on the amount of money in the pool and the total number of students of the same age who are in school that year. Funds are invested mainly in fixed income, such as bonds.
Usually you’ll need to sign a contract agreeing to make regular contributions to the plan over a set period. Group plans are offered and administered by scholarship or group plan dealers. They may be more expensive than individual or family plans, depending on your investment choices.
Group plans tend to have strict contribution and withdrawal schedules, meaning that if your plans change – a big possibility over 18 plus years – you could forfeit your enrollment fee or affect how much money your child can withdraw when they need it for school.
Here are the five main providers of group RESPs:
- Canadian Scholarship Trust Foundation
- Universitas Financial
- Heritage Education Funds
- Knowledge First Financial
- Children’s Education Funds Inc.
What To Ask Before You Open A Group RESP
Some Group RESP providers have fallen under scrutiny from the Ontario Securities Commission for providing misleading plan documentation. Before you choose an RESP provider, make sure you read the fine print and ask about:
- Fees for opening an RESP
- Fees for withdrawing money from a RESP
- Fees for managing the RESP
- Fees for services and commissions
- What happens if you can’t make regular payments
- What happens if your child doesn’t continue his or her education
- If you have to close the account early, do you have to pay fees and penalties; do you get back the money you contributed; do you lose interest and can you transfer the money to another RESP or different account type?
You can withdraw from a group RESP contract and get all of your contributions back in the first 60 days after receiving a prospectus. If you’re past the 60-day point, you might be better off seeing the plan through to the end. Otherwise you might pay fees upwards of $800 to $1,200 to collapse the plan during the first few years.
Final Thoughts
When our youngest child was born we signed up to receive free samples and coupons from a few different websites. A short time later we got a phone call from someone who asked if we received samples of baby formula. It turns out he was a group RESP salesman in disguise and he wanted to come to our house to discuss setting up a plan.
We avoided a group RESP plan and instead chose to open a family RESP account at our bank. Both of our children are named under this plan, so if one decides not to pursue a qualified education program, we don’t have to worry about closing an individual RESP – the benefits are simply shared by the children that do qualify.
As a young family with lots of competing financial priorities, we only contributed what we could afford – between $50 and $200 per month – for the first few years. We bumped that up as the kids got older and now we max out our annual contributions at $2,500 per child.
We like the self-directed RESP because we’re not tied to a specific contribution every month, plus we have the flexibility to contribute lump sums whenever our finances allow for it.
The lesson here is to avoid Group RESPs and Scholarship Trusts. Open an Individual or Family Plan RESP at a bank or credit union, not from the guy chasing you down in the maternity ward.
My wife and I are spending this August long weekend planning our dream trip to the U.K. next summer. So far we’ve booked flights to Edinburgh, Scotland and found an Airbnb for our two-week stay in Kilkenny, Ireland. We’re trying to fill in the rest of the details, including travelling to Inverness, flying to Dublin, and finding interesting attractions to see along the way. We hope to finalize our itinerary in the coming weeks.
It’s gratifying to see our dream vacation turn into reality. I first blogged or made reference to a 4-week trip to Ireland back in November, 2011 as part of an 11-part financial freedom series:
How accurate was this goal? Incredibly, the only thing that has changed is our desire to see Scotland in addition to Ireland on our month-long adventure.
We’ve been talking about this trip for more than 10 years, but seven years ago I wrote it down in this blog and we held ourselves accountable to making it a reality by 2019. Here we are, in 2018, making concrete plans for our dream trip to the U.K. in the summer of 2019. Just like we planned. It’s a beautiful thing.
This Week’s Recap:
I wrote one post this week on how I try to keep the needle moving forward on my financial freedom goals despite low (or no) wage growth.
Over on Rewards Cards Canada I explained how we redeemed Aeroplan miles for flights to the U.K., saving thousands on fees and taxes along the way.
Weekend Reading:
Horizons ETFs made headlines this week when it announced two new all-in-one balanced ETFs to take on Vanguard’s asset allocation ETFs. Not everyone was impressed with the announcement, however, as Horizons is claiming in its advertisements that these ETFs come with 0 percent management fees. The problem is, it’s not really true:
Purpose Financial CEO Som Seif points out correctly that while this new “fund of funds” may come with no additional management fee, the underlying funds (the seven ETFs held under the umbrella) do come with fees.
This is really sad Smoke and Mirrors marketing by an industry peer. It’s what I hate about our industry. The underlying funds have fees (can read in fine print). So saying 0 Mgmt fee is a lie. Forcing ppl to read fine print for facts is dishonest. #needtodobetter https://t.co/BOKsshcqSW
— Som Seif (@somseif) August 4, 2018
Does Canada really need an inheritance tax? Global’s Erica Alini tackles this complicated topic.
The stock market is half the size of its mid-1990s peak, and 25 percent smaller than it was in 1976. Here’s why that’s a problem for everyone.
Steadyhand’s Scott Ronalds lists twenty smart takeaways from 20 years in the investment industry. My favourite lesson:
“Ignore the phrase, “the market is at an all-time high.” It’s overused and is an inappropriate scare tactic that encourages market timing (which doesn’t work). If you refrained from investing in stocks when the market was at an all-time high five years ago, you’ve missed out on big gains.”
Morgan Housel on why you’re more likely to be right if you’re constantly trying to prove yourself wrong.
And again, here’s the brilliant Housel with the spectrum of financial dependence and independence. What level do you fall under? I feel stuck somewhere between level 7 and level 8.
A great read on why points obsessed travellers (Hi!) are terrified of losing their perks, referring to Starwood fans fearing what’ll happen to their beloved loyalty program when it merges with the giant Marriott rewards program later this month.
Michael James has been serving as executor of an estate, causing him to reflect on how to sort his own affairs to make it easier for his sons.
On the same topic, Rob Carrick asks solo seniors who will execute your will when you die?
Here are four lessons from Hetty Green, the richest woman in Wall Street history.
We always hear that long-term stock returns should average between 8-10 percent a year. But what are normal stock market returns? PWL Capital’s Ben Felix explains.
And here’s Ben Felix’s latest YouTube video where he explains why foreign withholding tax is a tricky little detail that can eat into your investment returns:
A Wealth of Common Sense blogger Ben Carlson explains the concept of ‘willing losers’ where people take actions that put them at a disadvantage, such as people who carry a credit card balance, or people who day-trade.
Tom Bradley says investors will look back and marvel at how good things were from 2014 to 2018. He says to expect lower returns over the next five years because the bull market is showing its age.
Here’s why Canadians are increasingly putting the ‘remote’ in working remotely:
“A growing number of Canadians are taking the term “working remotely” literally, leaving the hustle and bustle of city life behind to work from their cottage or winter home down south.”
Canadian Dividend Investing’s Nelson Smith shares an early retirement strategy – using your RRSP to save taxes.
Finally, a truly bizarre tale about how an ex-cop rigged McDonald’s Monopoly game and stole millions.
Have a great August long weekend, everyone!