A few readers have requested that I do a blog post about the performance of my Registered Education Savings Plan (RESP) portfolio based on the TD e-series low cost mutual funds. As I’ve written before, I chose the TD RESP solution as it provided a low cost way to index the bambinos education fund. In addition, it gave me the option to build the RESP in small increments without any extra fees (unlike ETF’s).
As I opened the account June 2008, I started investing shortly after in a diversified portfolio. As you may know, not long after is when the bottom fell out of the markets. As most investors who were positioned in equities lost money, our RESP account was no different.
On the bright side, however, it could have been a lot worse. My tendency to dip my toes by purchasing small amounts over time instead of jumping in feet first worked to my advantage in this case.
What did the diversified portfolio consist of? The long term plan for the RESP is to be aggressive for the first 10 years (90% equities 10% bonds) with increasing fixed income as the University tuition nears. I copied the table from my RESP strategy article below.
Index 0-10yrs 10-14yrs 14-17yrs 18yrs + Canadian Equity 30% 20% 10% 0% US Equity 30% 20% 10% 0% International Equity 30% 20% 10% 0% Canadian Bonds 10% 40% 35% 0% GIC’s 0% 0% 35+% 75% Money Market Fund 0% 0% 0% 25%
As I mentioned above, although my plan to is follow the allocation stated in the table, I never actually got to that point as I stopped buying when the markets started their crash.
Below is my actual allocation and portfolio values thus far. We deposited $2,500 into the account last year with a $500 CESG top up from the government.
Portfolio as of Jan 30, 2009
|TD CDN Money Mkt||41.249||$10.00||$412.49||18.170||$412.49|
|TD CDN Index-e**||38.346||$13.70||$525.34||23.140||$829.12|
|TD US Index-e**||34.007||$17.54||$596.48||26.270||$814.27|
|TD CDN Bond Index-e**||24.093||$10.60||$255.39||11.250||$257.68|
|TD Int’l Index-e**||64.300||$7.48||$480.96||21.180||$772.83|
|Total as of Jan 30, 2009||$2,270.66||$3,086.39|
Despite the paper loss thus far, I’m not too worried as there is a long time frame before the money will be needed. As you can see, we still hold 18% of the portfolio in the TD Money Market fund which I plan to deploy soon to take advantage of the lower prices.
That reminds me, it’s about that time for our 2009 RESP contribution.If you would like to read more articles like this, you can sign up for my free weekly money tips newsletter below (we will never spam you).