Q&A: RESP investing
Question: We had purchased an RESP with Heritage Education Funds. We are no longer contributing to that plan and it is worth approx $20,000 in real dollars today. Moving forward we are looking for a good recommendation to set funds aside for our son who will need it in five years. – Mary D.
Gordon Pape answers: At this stage, the priority should be to keep the financial risk in the RESP to a minimum. You want to be sure that the money will be there when the time comes for your son to begin drawing on the plan. Therefore, it’s not a good idea at this stage to be investing heavily in stocks or equity mutual funds.
A good short-term bond fund is worth considering, such as the Phillips, Hager & North Short Term Bond and Mortgage Fund. It had a profit of 2.22% over the year ending Sept. 30. That’s not a lot, but the risk level is low.