Your SlideShare is downloading. ×
  • Like
Resp raiding even saving parents
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×

Now you can save presentations on your phone or tablet

Available for both IPhone and Android

Text the download link to your phone

Standard text messaging rates apply

Resp raiding even saving parents

  • 40 views
Published

 

  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
40
On SlideShare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
0
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. “Page 1 of 2 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,in any way, written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Man Bites Man! RESP – Raiding Even Saving Parents.The biggest problem with savings is the rate of inflationeating your cash savings. The reality of ‘financialproducts’ is they do not work to hold value for you buterode value of savings entrusted even more than theerosion of inflation. A most compelling example of thisworking through policy of government is the CanadianEducation Savings Grant (CESG).A happy parent or grand-parent wants to do what they canto help and nurture their children so they scrimp to savefor their children’s future. The Registered EducationSavings Plan (RESP) seems just the responsible thing todo. The government in Canada offers no tax shelter for these plans but through the CESG will top-up with 20% to as much as $500 each year.The relevant question is whether you intended these funds be registered (but these are not taxshelters for your contributions) so as to gain the government contribution. There is not much in that.Introduced in 1998, the 2007 Canadian federal budget increased contribution limits, for every $100deposited to an RESP, the federal government adding 20 per cent as a matching CESG to boostyour savings. These can be self-directed but not without using bank held government bond funds asthe income investments, which have low rates of gain. The bank annual fee eats most of the CESG(being really an incentive for you to hand over your cash to the banks so they gain fees on the lot).Current Government of Canada marketable bonds - average yield - over 10 years, 2.49% (otherterms are even less) on 2500 is $62.25 (less bank management fee of $50 per year) = 12.25/2500 =0.49%. That net gain is less than inflation which has averaged 3.02% the last decade, 3.40% overthe past 17 years the same interval as a RESP is eligible to run.What about that nice $500 contribution by the government that was taken from other taxpayerssocial needs supposedly going to benefit your child’s education costs? Adding the CESG makesWhat investors expect of bankers financial products is a way to secure their hard earned savingswhile growing their wealth. The circularity of ‘investment talk’ one gets from fund managers andadvisors who have sold you their “goods” and taken your money to ‘safely invest’ is like whatAlice gets at the Tea Party.“Take some more tea,” the March Hare said to Alice very earnestly.“I’ve had nothing yet,” Alice replied in an offended tone: “so I ca’n’t take more.”“You mean you ca’n’t take less,” said the Hatter: “it’s very easy to take more than nothing.”Pretty much that is the case. They have taken it all before you arrived. “Alice, meet Dr. ArtfulDodger.”
  • 2. “Page 2 of 2 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,in any way, written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Man Bites Man! RESP – Raiding Even Saving Parents.that $3000 @ 2.49% which is $74.70, less bank fee of $50 = $24.70 for a net gain of 0.823%. Thatis still sabotage, not an investment.Over the 17 years of an RESP the erosion of wealth given with best of intentions is profoundlyeaten by 3.40% inflation and only 0.823% gain. A dollar put in this fine grinding mill will leave amere benefit of 0.64157 of every dollar put in. That means on maturity, in2030, a mere $1924.71 will be the value in 2030 dollars of the $3000 put intothat RESP with the CESG top-up.Over a third of your and government money pooled into the RESP is gone. Orlook at it as just $1924.71 of the 2500 you put in, just 76.99%, is left. Nearly aquarter of the current dollar value has been eroded. While the tax-money yourfellow taxpayers had added is completely gone right down the financialindustry corner pocket without any supposed benefit to your child due to yourmoney not earning an effective rate. There is no incentive for a fund managerto do more than buy a government bond and parce it according to subscriptions.“Easy come, easy taken,” says Jack Dawkins, The Artful Dodger.The situation of tax-sheltered American 529 savings plans is no different than any mutual fundproduct. None can show a rate of return after their fees beating inflation. The kid’s education piggy-bank is a rich target loaded with emotion of parents having done the right thing.Because we can, we have charitably provided small investors the means to raise their financialfutures with our ABC’s; Tax Charity; and now, BookBuilder portfolios. We provide new theory ofthe firm that is logically correct and mathematically proven which markets have scientificallyproven consequences. Our “likeables” are liked by the market as they have demonstrated.Our reasons for having any equity in our portfolios are clear, concise and consistent. The equitieswe hold are “likeables” tending to gain 67% of the time. We do not make stock prices but canreasonably respond to stock price tendencies, by our knowing the price of risk, the downside, andbuying and holding accordingly. That is new fundamentals from theory we have put into policyobtaining 29% IRR average. Know What You Have. Have What You KnowOur view is risk averse. Of course we require a fee for doing that. Mail us for our help.Ernst and Hans Goetze,Architypes Inc and StockTakers LimitedHead Office76 Midridge Close SECalgary, ABT2X 1G172 Cornwall StreetToronto, ONM5A 4K5351 Chemin BoulangerSutton, PQJ0E 2K0450 538-1270