What You Should Know About The Recent Financial Crisis And Resps

By Author: Allen Baldwin
Total Articles: 1
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Many Canadian families opened RESP's and deposited after tax dollars with their local bank, credit union or Financial Planner. These entities in turn, more times than not invested their money into mutual funds that in many instances had a major exposure to equities. Then of course came the market crash of 2008 and many of these families are wondering "how it is they're still not back to even ". This is especially significant since the time horizon for an RESP is 18 years.
Well according to Jonathan Chevreau, Personal Finance writer of the National Post there are two reasons:

Well according to Jonathan Chevreau, Personal Finance writer of the National Post there are two reasons:
"One, broad markets are still below the highs reached before the crash. Two, the arithmetic of loss means a 50% loss followed by a 50% rise does not mean you're back to even ." He goes on to state in a very simple example. "If you invest $100 at a top and lose 57.7%, you have just $42.30 at the bottom. But any gains you enjoy subsequently are coming off a lower base. Thus even a 100% gain of $42.30 brings you only up to $84.60 - still ...
... $15.40 less than the $100.00 you started with. To get back to $100, you'd need a 136.4% gain." (1)

That is the reality of many Canadian families . And remember, RESP's have a relatively short investment horizon. The expected life is 18 years assuming that it is started just after birth. What is a family to do if their funds experience what was articulated in the aforementioned? There just won't be enough money for post-secondary. That is exactly what happened to thousands of
families who invested their RESP Funds in equities or mutual funds. This sort of crisis can be minimized when investing with CEFI. Throughout this entire financial crisis, all of our investments showed positive rates of return. This is important. The investment advisors that CEFI works with understand their mandate very well and invest accordingly. All of our monies are invested in low risk investments in the following:
Summary of Investment Portfolio
The allocation of the Plans' investments by asset class for the year ending December 31, 2011 is:

Asset Class % of Total

Treasury Bills and Short Term Notes 12.48%
Government and Corporate Coupon Bonds 75.97%
Government and Corporate Zero Coupon Bonds 3.27%
Variable Rate Securities 8.28%

Total 100.00%

Children's Education Funds Inc. has paid out the highest
EAPs for all scholarship plans for the past 16 years! *

*CEFI has compared its Education Assistance Payments for the Group Option Plan to those of other Group Scholarship Plans through publicly available information and disclosure. On the basis of this comparison CEFI has determined that its Group Option Plan has paid the highest Education Assistance Payments per unit to beneficiaries from 1996 to 2012 inclusive. *Please refer to the latest management report of fund performance available at sedar.com
CEFI specializes in REEE Canada for Children's Post Secondary Education.
If you want to know more information,please visit our site:http://www.cefi.ca