# Heritage Education Fund - Stay or get out?



## Chris1234

Hi Everyone,
I signed up for the Heritage Education Fund in Nov, 2005. I have two plans and I contribute $75/month for each kid. Total $150/month. Fees for both plans are $1500 each. In the Prospectus it states that if you terminate the plans all these fees are not returned to you. There is little flexibility for payments if for example you loose your job and can not pay. If you stay in the plan until the bitter end they do return these fees to you.
I guess my question is do you or anyone on here think that if I pull out now loose the $3000.00 in fees sign up with something else if I could possible come out of this thing okay?
On the most recent Heritage statement it says that my oldest son will have $40,000. 00 for option one (Must enroll in a 4 yr program) and $31,776.00 for a self directed option 2. For my youngest son they say he’ll end up with $43,391 (Option 1) and $34,276.00 (Self directed option 2).
I have been talking to a financial advisor and this is the plan he suggested for me..a family RESP
http://funds.dynamic.ca/fundprofile.aspx?f=PW4K&lang=EN 
I feel really sad about this. I would really appreciate some sound advice.
Thanks in advance!


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## CanadianCapitalist

Chris1234 said:


> Hi Everyone,
> I signed up for the Heritage Education Fund in Nov, 2005. I have two plans and I contribute $75/month for each kid. Total $150/month. Fees for both plans are $1500 each. In the Prospectus it states that if you terminate the plans all these fees are not returned to you. There is little flexibility for payments if for example you loose your job and can not pay. If you stay in the plan until the bitter end they do return these fees to you.
> I guess my question is do you or anyone on here think that if I pull out now loose the $3000.00 in fees sign up with something else if I could possible come out of this thing okay?
> On the most recent Heritage statement it says that my oldest son will have $40,000. 00 for option one (Must enroll in a 4 yr program) and $31,776.00 for a self directed option 2. For my youngest son they say he’ll end up with $43,391 (Option 1) and $34,276.00 (Self directed option 2).
> I have been talking to a financial advisor and this is the plan he suggested for me..a family RESP
> http://funds.dynamic.ca/fundprofile.aspx?f=PW4K&lang=EN
> I feel really sad about this. I would really appreciate some sound advice.
> Thanks in advance!


Can you provide more information? How long will you be contributing for your two sons? Do the estimates of RESP value include your contributions, CESG etc.? (I'm guessing it does but can you confirm?).


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## Chris1234

I will be contributing until 2022 and 2024. An yes these amounts include my contributions and the government grants.


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## CanadianCapitalist

First of all, it seems to me that the Group RESP plan value is a tad too optimistic. A quick IRR calculation tells me that the plan is expecting a return of 7%. Sorry, that kind of return ain't possible with bonds.

I'm not fond of Group RESP Plans but it seems to me that the best course of action for someone who has signed up and who can keep contributing is to stay in the plan. The initial hit from the enrollment fee is far too large to overcome for most investors on their own.


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## MoneyGal

Yeah, but the return expectations from that fund aren't bond-like - they are a kind of tontine. 

How else can the salespeople simultaneously promise both that the investments are "safe" and placed in bonds only, *and* that you have an expected return of 7%? 

The excess return over the risk-free rate is the foregone contributions from those who drop out of the plan or whose kids don't follow an approved course of study and the contributors thus forfeit the investment growth.


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## Berubeland

Keep doing the $150 per month and also get a self directed plan. You will lose too much if you back out but this way if there is a plan B. You certainly don't need to increase your plan if you have extra dough ect. 

I also don't like the group plans because of the way they are marketed to people. Too much emphasis on what the government pay not enough on the performance of their product. It really sucks that they steal so much of people's money (from people who back out and programs that don't qualify etc) if these people had regular plans they could cash them in if they had to or roll them over into RRSP's and keep the interest on the government grant money. 

It's really unfortunate they don't concentrate on improving their returns rather than ripping people off.


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## CanadianCapitalist

MoneyGal said:


> Yeah, but the return expectations from that fund aren't bond-like - they are a kind of tontine.
> 
> How else can the salespeople simultaneously promise both that the investments are "safe" and placed in bonds only, *and* that you have an expected return of 7%?
> 
> The excess return over the risk-free rate is the foregone contributions from those who drop out of the plan or whose kids don't follow an approved course of study and the contributors thus forfeit the investment growth.


But here's the problem: fees. The fees tend to more or less equal the boost from attrition leaving you with bond-like returns. I should have explained that in my post but that's what I inferred from reading through the prospectus of these Group Plans.


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## MoneyGal

My recollection (although it's been a while since I looked at those plans) is that even after fees, the IRR from SOME plans has been higher than the risk-free rate because of the tontine element. 

I know you know that regulatory report that came out a few years ago in Ontario which led to some new regulation of RESP salespeople - that's the report I am thinking of. Isn't that one of the findings of the report and the fundamental justification of the sales pitch that you can get high returns at low/no risk - that some people have experienced exactly that?

I mean, the fees on those plans are ridiculous - as are the restrictions and the failure rate of the plans. But my understanding is that there have been "successful" plans that have produced the advertised RoR, which is why the providers can get away with providing the redonk examples that they do. Of course, I stand to be corrected.


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## OptsyEagle

The fees are pretty much what the salesman received when he sold the plan to you. Like DSC charges on mutual funds if you hang in there, the plan will pay the salesman for you, but if you don't, then you pay them.

The above average rate of return is coming from the estimate of how many people will not go on to post secondary school for the amount of years required. Those people will lose their interest and it goes to the ones who stay with it. My only concern is "why does the new investor think that their children will do something that the average child did not?".

The self directed plan does away with the loss of the interest and allows for a CESG. Unfortuneately it doesn't benefit when other children do not go on to post secondary school. Since the self-directed plan gets a 20% boost and ends up being a lower estimate, you can get the idea of how many kids/parents are going to miss out on this.

I would keep going with it but choose the self-directed plan to be on the safe side, if you still can. That is my opinion. Forget about the Dynamic plan. That is just another salesman trying to get paid. He/She should have answered these questions for you, with the appropriate answer being "stick with the plan you have".

Good luck to you.


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## embiencechaser

Chris1234 said:


> Hi Everyone,
> I signed up for the Heritage Education Fund in Nov, 2005. I have two plans and I contribute $75/month for each kid. Total $150/month. Fees for both plans are $1500 each. In the Prospectus it states that if you terminate the plans all these fees are not returned to you. There is little flexibility for payments if for example you loose your job and can not pay. If you stay in the plan until the bitter end they do return these fees to you.
> I guess my question is do you or anyone on here think that if I pull out now loose the $3000.00 in fees sign up with something else if I could possible come out of this thing okay?
> On the most recent Heritage statement it says that my oldest son will have $40,000. 00 for option one (Must enroll in a 4 yr program) and $31,776.00 for a self directed option 2. For my youngest son they say he’ll end up with $43,391 (Option 1) and $34,276.00 (Self directed option 2).
> I have been talking to a financial advisor and this is the plan he suggested for me..a family RESP
> http://funds.dynamic.ca/fundprofile.aspx?f=PW4K&lang=EN
> I feel really sad about this. I would really appreciate some sound advice.
> Thanks in advance!



Hi Chris, just saw your concern. I may be too late but I have lots to tell.
Just read the following site in regarding Heritage Education Funds. http://web.me.com/picture3/Heritage_Education_Funds_Inc./SITE.html


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## embiencechaser

*Heritage Education Funds*

Heritage Education Funds Inc. should be a concern to every parent who believe they are investing for future of their kids. I am one of six hundred some member out there only find out eighteen years too late. My daughter just lost entire year of her education because HEF won't release her funding. Her registration package was lost form US to Canada. She had to pay for her own registration so she can stay in the college. Long story shot. Her 16 class finished on Dec. 2010. HEF won't release fund to her so she can continue register more class. 

It is better register a bank account with no question ask, no form to fill, most of all, play that stupid little out dated game Heritage Education Funds Inc. Play.

I am one of the victim, one of many frustrated parents not getting funding after maturity. I met other parents post on HEF facebook, of course they took it off. I have no where to go but post the following. 

http://web.me.com/picture3/Heritage_Education_Funds_Inc./SITE.html


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