Q&A With Gordon Pape: Solving An RESP Dilemma
Here, financial guru Gordon Pape suggests a fund for a reader looking into BMO products.
Q – I have $2,400 in a RESP in a BMO savings account. I could not transfer this to BMO Investorline since they don’t accept the provincial grants I guess. So I need to invest in a BMO product, ETF, or mutual fund. My kids are nine and eleven. Do you have any BMO recommendations for RESPs with time horizon of say seven years? Bond ETFs like ZCS are down and stock ETFs like ZWH are up, and I don’t know any good mutual funds. Any recommendations on BMO products? Thank you. – Jamshid S.
A – You might want to consider the BMO Target Education 2025 Portfolio. It is a balanced fund, about 58 per cent in stocks with the rest in fixed-income and cash. The fund will be rebalanced to reduce risk as it approaches its maturity date. It’s not a cheap fund (MER 1.83 per cent) but the return is decent (7.5 per cent over the year to Oct. 31, A units). The risk factor is on the low side, which is important when you are saving for the kids’ education. And the maturity date closely coincides with when you will need the money. – G.P.