Harvard Or Yale

[wgraham]

As you may know, Tammy and I are expecting our first child, a boy, this February! This is, as you can imaging, a very exciting time for us!

Thoughts of the future are constantly on my mind. His first smile, taking him climbing, that first bike ride with no training wheels, teaching him how to skate and play hockey and of course that first kiss.

But also thoughts of challenges: How will he be when he loses his first hockey game 16-0 as the Latvian boys did to the Canadians on Boxing Day? Will he hold his head high or hang it in shame? What is it like to go four days with two hours sleep? Will he be healthy? Will we be great parents? And, when the time comes, can we afford to send him to the school of his desire?

Aside from their love the most valuable thing my parents provided for me was a formal education and for that I will always be grateful. The last I checked the bill came in at about $75,000.....and that was only for a Under Graduate degree in Computer Science.....not Harvard Law!!! And do you think that 20 years from now that education will be cheaper or more expensive with a 2% inflation target? You guessed it!

So I started to think about how we are going to give our boy every opportunity to go to Harvard if that is what he wants. We could do the traditional investment and open an RESP account. Let`s do the math on that investment. If we put $50,000 into that account and got 5% growth per year for 20 years we would have $135,632.01. Not bad. That will probably pay for an undergrad at most Canadian institutions but it certainly isn`t Princeton.

Or, what if we thought outside the box a little and put that $50,000 into an investment property. Let`s do the math on that investment:

Home purchase price: $350,000

Mortgage Pay Down: $215,000

Gross Rental Income: $75,983

Home Value in 20 Years: $ 632,138

Pre-Tax Profit (Eduation Fund): $ 576,721

That should definitely pay for any education your child deserves!

So will your child be able to go to Harvard or Yale if that is what they choose or will you one day have to say to them, "I am sorry but I put your education into an RESP"

P.S. There are reasons to invest in RESPs and you should talk to your tax accountant as to the pros and cons of such investments.

P.P.S. If you are thinking, "I don`t have $50,000 to put into a RESP or Investment Real Estate" and would like to see the numbers on a low money down real estate investment vs a monthly contribution to an RESP I would be happy to talk with you!

Please comment below......How will you be paying for your child`s education?

 

[invst4profit]

As parents we decided how much we were comfortable contributing to our two children`s education and made it very clear from early age that they had both better be prepared to save as well.
We had no idea if either of our children would be interested in higher education, although ultimately they both did, so we simply set up investment accounts that we regularly put money into. If they had not gone on in school the money remained ours to do as we pleased.

In the end we had enough to cover about half of the cost which is the maximum we would ever consider contributing to there education. We firmly believe if children are not prepared to save to contribute to there own education they do not deserve to be there and will likely not be successful without that financial motivation. Like investing they must have skin in the game.

When they graduated we loaned them money at a low interest rate to pay off any school debts.

 

[RedlineBrett]

QUOTE (invst4profit @ Jan 12 2010, 01:32 PM) As parents we decided how much we were comfortable contributing to our two children`s education and made it very clear from early age that they had both better be prepared to save as well.

You mean you didn`t charge them for all the food they ate and clothes they wore while growing up?

What about their TRUE expenses! By only paying for half their school I bet your children didn`t really cash flow! (sorry couldn`t resist)

 

[housingrental]

Greg has an unhealthy relationship with 50%

 

[gwasser]

QUOTE (invst4profit @ Jan 12 2010, 01:32 PM) As parents we decided how much we were comfortable contributing to our two children`s education and made it very clear from early age that they had both better be prepared to save as well.
We had no idea if either of our children would be interested in higher education, although ultimately they both did, so we simply set up investment accounts that we regularly put money into. If they had not gone on in school the money remained ours to do as we pleased.

In the end we had enough to cover about half of the cost which is the maximum we would ever consider contributing to there education. We firmly believe if children are not prepared to save to contribute to there own education they do not deserve to be there and will likely not be successful without that financial motivation. Like investing they must have skin in the game.

When they graduated we loaned them money at a low interest rate to pay off any school debts.

We had problems with the RESP system as well since there is no guarantee that the kid(s) will go to university. So we set up normal trust accounts at stock brokerages and deposited all family allowance checks in there (only be taxeable to the kids). There were some birthday contributions from grandparents that went in and finally $5000 once in while from the parents. I think we did that twice or trice for my daughter`s account and twice for my son`s.

The accounts were invested in a couple of mutual funds, some did good, several were dead money.

By her 17th birthday my daughter had entered university, other than this fund and $400 per month food money, her education did not cost us a penny (perhaps a few bills for birthday and love money). Now at 22 is finishes her Bachelors in Geology and has enough money for a small downpayment on a house or apartment. Even with even no geologist position comes up right away, along with a temp job at Coop she is self-suffcient. Heck, she might be able to finance a M.Sc. on her own (says a deluded proud Dad).

My son was a different story, he was a typical teenage boy who couldn`t bother with school. He barely finished highschool. He thinks he can make lots of money on the internet and couldn`t keep a 3 month part-time job at Coop. If this trust fund was a RESP the money would have been mostly lost. But now he has still has his fund.

Although not academically inclined, he definitely is an entrepreneur. Now he realizes that the internet is not making him that much money. So he picked up his socks and actually signed up for a course in Business Admin at SAIT. Last week, to our great amazement, his majesty cleaned his room without urging. Who knows, we hope he will find his way - and that trust fund will be waiting for him no matter what form of education he ultimately decides to follow.

To clarify, it is not that we don`t love our son. He just follows his own path of life and is as hard headed as his parents. In many ways he is a great kid and he has his standards. He just doesn`t know where he wants to go and I am not even trying to tell him what to do. But once he makes up his mind his little trust fund will be there to support his career choice education rather than that it returns in part or in its entirety to the state.

I guess, Wade`s idea is quite good as well.

 

[markl]

Wade,

You echo my thoughts exactly I went a little cheaper but same logic. We went a little cheaper in price but the goal is to have a paid off property for her by the time she is seeking higher education where if she is like her mom and not so much her dad then she might continue on for a while this will provide Eleanor with many choices at the time whether to sell or continue to hold the property and rent it which would cover most of her expenses.

Oh and by the way I won`t be making the Jan event we will have to go ice climbing another time.

Regards,

 

[Alvaro Sanchez]

My wife and I went to university using scholarships, wife using her brains and me my luck... We both have computer science degrees... We have some RESP and properties, each of our (3 kids) has been allocated a property as a back up in case that we can not provide funds.

My oldest 15 might be staying in Canada for Medicine or Computer science. She is soccer player at competitive level so there is an option for academic/sports scholarships. My second has expressed interest in going to Harvard (Law). She mentioned that when she was 7 and still convinced that she will be attending such school. My son who is 7 has mentioned Medicine but I will be as happy if he goes into trades.

1) Keep RESP contributions.
2) Scholarships academic/sports are an option.
3) Parents are open to support them. Wife planned that each kid would be born 4 years apart so university tuition would not be concurrent.
4) Properties are being paid and appreciating in value. We could sale them when time is due or refinance them to pull out equity or backup student loans.
5) Combination of all.

Moral principles and education is as far as I know what you can pass to your kids. So we`re planning to support them should they decided to go to higher eduction.


Please comment below......How will you be paying for your child`s education?

 

[invst4profit]

QUOTE (housing rental @ Jan 12 2010, 09:53 PM) Greg has an unhealthy relationship with 50%


It wasn`t exactly 50%. What we actually did was pay there tuition and they were responsible for food and lodgings.
Throughout the school year we sent some extra money and filled up there freezers when we visited.

The real kicker was when my wife decided to go back to university at the same time that both kids were in school. We hadn`t saved for that.
I agreed to give it a try providing she adhered to the 50% rule. She payed her tuition and I provided food and lodgings.
To this point in time she has been a better investment than the kids but I am still counting on them to take care of us in our
old age.

 

[EdRenkema]

What about paying their own way?
It is a certain way to motivate them to work hard at it, thats what I did, I manged to get myself off academic probation in one semester and actually received honours later on. I`m not saying there is only one way what I`m questioning is why is it deemed a non-negotiable fact of life that parents pay for their children`s post secondary education?

Is there a status quo here?

 

[JohnS]

Personally, I like the way my parents did it with me, and if I ever have kids, I`ll probably want to do it the same way.

There were 2 main components to it. The first is the general rule that they would pay for the first degree (assuming I wanted to go to university) but that I was responsible for any others. They would help me out with the others within reason, too. (Meaning, they wouldn`t support me if I became a perpetual student, but if I was seriously trying to better myself, they`d lend me the money.)

The other component was that of my contributing what I could. Every summer, I had to get a job to go towards my expenses, but the job was supposed to be in my field. They wanted me to work more for the contacts and the experience than for the money, but the money was to help me out during the year.

So, yeah, I`m sure I`ll incorporate those two components into it, if I ever have to, but no doubt real estate will be how I help them finance their education.

Have a good one, all!

JohnS

 

[gwasser]

QUOTE (EdRenkema @ Jan 14 2010, 10:19 AM) What about paying their own way?
It is a certain way to motivate them to work hard at it, thats what I did, I manged to get myself off academic probation in one semester and actually received honours later on. I`m not saying there is only one way what I`m questioning is why is it deemed a non-negotiable fact of life that parents pay for their children`s post secondary education?

Is there a status quo here?

I told my kids that studying is a full time job, so they have to study at least seven hours a day. I told them I would support them to in their costs of living. But they will have to work for the extra`s. After their B.Sc. they are on their own. If they don`t study they have to work and pay rent, even while living at home.

My Son goes now to SAIT and he falls kind of in between, he just started so that scenario is not entirely worked out. His parent`s expectation are that no matter what, by 21 he is out of the house and standing on his own feet (kind off). Only exception, if he belatedly decide for a university degree afterall.

 

[mortgageman]

I`m making the required $2000 per year payment or whatever it is to get the maximum government grant for each of my boys. Why wouldn`t you want to get a grant? But the RESPS aren`t the main vehicle. I will be buying two properties, one to be allocated to each of them, that while probably not fully paid for by the time they are ready for university will provide them with option to live in it, rent it or sell it.

 

[housingrental]

Awesome Greg
You need to hope they forget you own a park

They might not be too motivated otherwise...

QUOTE (invst4profit @ Jan 13 2010, 07:09 PM) It wasn`t exactly 50%. What we actually did was pay there tuition and they were responsible for food and lodgings.
Throughout the school year we sent some extra money and filled up there freezers when we visited.

The real kicker was when my wife decided to go back to university at the same time that both kids were in school. We hadn`t saved for that.
I agreed to give it a try providing she adhered to the 50% rule. She payed her tuition and I provided food and lodgings.
To this point in time she has been a better investment than the kids but I am still counting on them to take care of us in our
old age.

 

[JBagorio]

In preparation to my kid’s education, from day one I have been contributing to their RESP and Educational ROTH. In the long run if these are not enough, between the education savings and my real estate investments definitely it would be plenty for them to attain what ever they what to become if they decided to do so.

I personally believe that education is important given that it will be their stepping stone, and something they can fall back on to in any case. But in terms of our kid’s success, I don’t believe their degrees or where they will attain it determines how successful they will be. It will definitely help, but I believe that their greatest education will come from their parents. Besides teaching them ethics, teaching and leading them on how to handle their finances which you normally don’t get through curriculum. As I have experience growing up with my parents…I will expose them by getting them involved in my business. This will strengthen their entrepreneurial mind set. Show them the honest and fair way of conduct business…it will be a good foundation. Over all I will remain supportive on what they will decide to take. Something they will love. I am not too worried on how much I spend on them, I am confident that with their upbringings and cultural influences, they will know how to repay their parents. There are so many ways!

 

[Nir]

Instead of thinking hard how to save for your child`s education, let them join your RE business so they don`t depend on a degree from Harvard to succeed in life and you don`t have to save so much.
Most of us investors studied hard (in my case MBA and B.Sc. in industrial engineering), then purchased Don`s book for $30 that changed my life and career 180 degrees.
So with all the respect, see if we can do better than our parents in terms of "pushing" to highest degree possible, and not repeat the same mistakes. Today EQ is more important than IQ. as Jason mentioned education and success do not necessarily go together. Cheers.

 

[holymoly]

QUOTE (EdRenkema @ Jan 14 2010, 12:19 PM) What about paying their own way?
It is a certain way to motivate them to work hard at it, thats what I did, I manged to get myself off academic probation in one semester and actually received honours later on. I`m not saying there is only one way what I`m questioning is why is it deemed a non-negotiable fact of life that parents pay for their children`s post secondary education?

Is there a status quo here?
I paid my own way, along with housing and other costs, by working part-time -- not due to any philosophical position, just out of necessity. Having said that, I qualified for grants and loans. I`m not sure to what extent that sort of help is available these days, so I do worry about my two kids being able to fund their own tuition. Can a student put her/himself through university working part-time these days? I have some money in an RESP for them, but not a lot.

 

[GaryMcGowan]

QUOTE (JNB @ Jan 16 2010, 01:32 AM) I personally believe that education is important given that it will be their stepping stone, and something they can fall back on to in any case. But in terms of our kid’s success, I don’t believe their degrees or where they will attain it determines how successful they will be. It will definitely help, but I believe that their greatest education will come from their parents. Besides teaching them ethics, teaching and leading them on how to handle their finances which you normally don’t get through curriculum. As I have experience growing up with my parents…I will expose them by getting them involved in my business. This will strengthen their entrepreneurial mind set. Show them the honest and fair way of conduct business…it will be a good foundation. Over all I will remain supportive on what they will decide to take. Something they will love. I am not too worried on how much I spend on them, I am confident that with their upbringings and cultural influences, they will know how to repay their parents. There are so many ways!
Jason I could not agree more! Thank you for writing what I was thinking. I think I grew up in a similar environment as you did. I mentioned to my wife the other day as we were talking about our three year old entering school next September, "I hope we are our kids greatest teachers".
Did education have a roll in my life? Yes, it was a one year program which I took when I was 24 after I had been married for a year. If I had gone directly to school after high school it would of been wasted. Where(whom) did I learn the most from? My parents and in the different business ventures they had. Post Secondary education was not something that was pushed upon me and I felt that I didn`t have to go because everyone else was.
How will we pay for our three kids to go to school? Just like everyone here, We will have a property for each of our children, and as they get older I will involve them to the management and inner workings of the property as a business.