Conference kaosws::canada

    
    
    	Why would you want to pay someone else?  Why not just open a 
    seperate savings account for your kid?
    
    
    
    
                                             

Congratulations on your new baby!!

My wife and I had our first (girl) 9 months ago.  We too were approached by 
this organization (and many others later) for these education funds.  
Basically there are two schools of thought (no pun intended).  You either 
think they are good or they are simply dumb!!

This slimey sales rep. thinks they're just another dumb way to force 
yourself to save money.  Akin to overpaying on your taxes and getting a 
rebate, or buying Canada savings bonds and cashing them in.
        
Without getting into too many details, there is a small tax benny to the 
fund, but hardly worth noting.

My advise for what its worth, start a GIC or bank account for your child.  
Put the same amount and your Family Allowance in there every month and 
you'll do quite well over 18 years (do the math).  If you've got the money, 
start your baby out with an additional $1,000 gift from Mom & Dad and re-do 
your math.  You'll do fairly well for your offspring.

Another option, buy a Mutual Fund.  They can take your monthly payments 
straight out of the bank, and dollar-cost-averaging will be on your side.  
What do you think DEC's stock was worth 18-years ago?  IBM's ??  Anyway, 
you get the picture.

Good Luck either way.

My $.02,
Mario

    Sheesh,
    
    Is everyone in this company having babies??!! :^)
    
    My father did something similar to what you were offered.  I believe
    the company was something like Canadian Sochlarship of Canada (I can
    verify the name and address if you so desire).  He put away $10 a month
    (or something like that) for 15+ years that could be used towards my
    University education.  If I didn't go to school, he would loose the
    interest on the investments and only get his principal back.  Keep in
    mind that savings accounts do produce taxable income, while this sort
    of plan shouldn't.
    
    One other thing to consider is that this sort of provides a
    guilt-factor for the child to go to post-secondary school.  If I hadn't
    gone to University and my folks lost all that money, I know I would've
    felt terrible.  
    
    Just another way of dumping guilt on a child I guess.
    
    Glad my dad did it,
    
    Doug
    

Also ...

I forgot to mention that these Education funds are NOT insured by the 
C.D.I.C.  While I'm sure that reputable people run these things, it is 
still possible that this company can go under within 18 years, and you'll 
have nothing for your offspring.

If risky investments are to your liking, then perhaps a stock portfolio 
would return a better percentage of growth, for the risk involved.  This 
was a big consideration for my wife and I.  Although a bank account or GIC 
will be taxed on the interest, they're still the safest.

A lot of people are asking the government why they don't offer a 
tax-deductible education fund much like RRSPs.  It's really what most of us 
new parents are looking for.  Why not ask your M.P.P. ??  8^)

Ciao 4 now,
Mario

    These plans are good IFFF your child takes advantage of the fund.
    
    They work by paying you back your capital, amortized over say the
    four years of a university course, and a share of an interest pool
    earned by all investments.  You may get none of the interest back,
    (when your child skips secondary education), or lots back if your
    child does well.  The payments from the interest pool depend on many
    factors ... 
    
    It is classed as a scholarship therefore:
    
    	1) they will only pay for certain educational establishments.
           Some people have been caught out because their child chose
    	   a college that the fund wouldn't recognize, even though the
    	   college was renowned for its courses.
    
    	2) the payments are linked to maintaining academic standards.
    	   Poor performance may result in a low scholarship which may
    	   mean you or your child still have to work to find money to
    	   keep the child there, which will then impact grades again
    	   and kind of destroys the principle of the whole thing.
    
        3) the payments depend on the performance of the investments.
    	   In lean years the interest pool may be small, and so the
    	   payments may be small.  You have no control as to how well
    	   these funds do.
    
    
    
    Personally, I prefer other means.  Savings trusts for the child, funded
    by family allowance can provide a good mechanism.  These trusts are
    taxable in the child's name only if they are funded from family
    allowance payments.  The income is attributable back to the parent
    if the payment to the trust exceeds the child's family allowance
    amount. (I'm not sure how the new plans for a Uniform Child Allowance
    will fit in, nor how the social benefits clawback will work).
    
    You can administer the savings trust in any savings vehicle, like
    savings accounts, GICs, CSBs, T-Bills ... whatever.
    
    Another popular way is to take an Insurance linked savings plan.
    These plans are LONG term plans and will cost you an arm and a leg
    if you cash them before about 10 years in lost interest.  10 years
    is typically the break-even point between these plans and a bank
    account.  After about 5 years, they seem to perform a little better
    than many other investments.  So, in the long term they do well.
    They do have a couple of advantages incidental to the insurance part
    of the plan ... There is a nominal life insurance in case ... and
    the insurance plan gives the advantage of guaranteed insurability
    when your child needs a policy of his/her own.
    
    Stuart