pp for Kids education (RESP)?

[metta2006]

In Canada, we have RESP (Registered education savings plan) for kids education. The Canadian goverment pays 20% of the contribution each year as a grant (maximum grant is $1000 yr). I have one and 5yr old. I set up TD e series index funds because I'm only contributing $5000 yearly for each. I allocated 10% for bonds (TD e series bonds fund is mainly short and some medium terms) and 90% in stocks and I am planning to move more to bonds as they grow older. What do you think of this? Too heavy on equities?
What do you think of using a pp for RESP? I don't know if I like gold and cash for a RESP though.....Physical gold wouldn't work as I wouldn't be able to get grant from the government.
Thanks in advance!

[metta2006]

I'm still wondering about my original post. Anyone can give me your opinion about this? Would you say Kids education fund using a pp could be too conservative considering long investment horizon?

So my 5 year old one has 14K in her RESP and 1yr old one has 10K. And I want to contribute 5K lumpsum yearly to my daughter for some years (to catch up) and 2500 dollars per year to younger one. So I think these account has too little money to divide into 4 different ETFs. What do you think? Also when the government grant comes in, which is 20% of my contribution, then I need to invest that too. In this case, I might be better off with prpfx? I'm not sure if I can buy that in Canada though.

[Lone Wolf]

I'm still wondering about my original post. Anyone can give me your opinion about this? Would you say Kids education fund using a pp could be too conservative considering long investment horizon?

A lot of this will depend on the fee structures and options available to you.  Are you permitted to purchase any security that you wish?

In the United States, we have "529" plans.  The choices that I've found (thus far) have been a bit limited.  If I had the option to build a PP in our 529s, I'd certainly do so.  I haven't yet found a good way to build anything like a PP without high fees, though.  I wound up going with 50% total stock market \ 50% total bond market and just using the best fee structure I could find.

Personally, I do see 90% equities as too aggressive.  First, it's very painful to have to make up for large losses, particularly when your time horizon is somewhat limited.  With educational spending, you are looking at less than 20 years before you need to start spending.  That is not a lot of time to smooth over any downward volatility.

[metta2006]

I can buy most of security under RESP, I think. I could buy gold ETF as well. Lonewoolf, you wouldn't do cash but just 50% TLT and 50% stocks? Why? Would short term government bonds (1-5years) suit cash portion for a pp? Thanks!

[Lone Wolf]

I can buy most of security under RESP, I think. I could buy gold ETF as well. Lonewoolf, you wouldn't do cash but just 50% TLT and 50% stocks? Why? Would short term government bonds (1-5years) suit cash portion for a pp? Thanks!

No, I am only forced to use 50% "Total Stock Market" \ 50% "Total Bond Market" because I have extremely limited choices in the 529 plans that I've found.  It's the best I felt I could do with the options that I had, but it's not ideal.

Everything that I hold outside of a 529 is in the Permanent Portfolio.

It sounds like you are not as restricted, which is great!  If I were in your shoes, I'd simply try to build a Permanent Portfolio: 25% stocks, 25% LT bonds, 25% gold, and 25% cash.  A short-term government bond fund of 1-5 years is a little on the long side for cash but I think it'd still work just fine.

If you can find 4 good Canadian ETFs that cover the 4 portions of the PP, I think you have a winner.  Sorry that I can't recommend anything but I'm just not familiar with very many securities that aren't denominated in USD!