Reminder: if you are new to this blog and want a detailed description of the RDSP please click on the header under “RDSP FactSheet” or “RDSP Information Bulletin”.

“Which financial institutions are offering the RDSP?”  With the launch of the RDSP on December 1st most people are trying to figure out which financial institutions will be offering the RDSP.  From what we have heard, there is most likely only going to be a few financial institutions who are able to issue the RDSP in December, one of which is expected to be one of the large national banks.  In the next year, it is expected that there will be 14-16 financial institutions issuing the RDSP, to be most likely followed by more.  As for which financial institutions these are and whether they will be up and running on December 1st is still unknown.  We will posting a list at www.rdsp.com as soon as this information becomes public.  

With a limited amount of issuers expected to be up and running in December, and the desire of many people to capitalize on the Grant and Bond for 2008, it is going to be essential that people setting up an RDSP know what questions to ask before setting up a plan.  With limited options available it will be important that individuals do not get locked into something that is restrictive and inflexible.  With this in mind we had Dennis Mullins, a financial planner from Ontario, write an article on things to look out for when buying an RDSP.

Things to keep in mind when setting up a Registered Disability Savings Plan, by Dennis Mullins

Since there should be a few institutions offering RDSP plans before the end of 2008 it is useful to cover what to look for in an RDSP Plan.  One important difference between an RDSP and the more familiar RRSP is the fact that, while people may have multiple RRSPs, there can be only one RDSP plan per beneficiary.   You will be able to transfer the RDSP from one institution to another, but it is important to get the best plan possible for your loved one.   Here are some questions to ask.

1.       What are my investment options? You want the widest range possible of investment options to best suit your investment tolerance and time horizon. If the time horizon is short, you may want to stick to fixed income investments like GIC’s and bonds. If the RDSP plan is expected to grow over several decades, a balanced portfolio which includes some equities may offer the best long term performance.

2.       What is the investment transparency?  You should expect regular reports and these should show where your money is invested and what the returns are.

3.       What are the administrative fees?  There may be fees to purchase the investment, ongoing administrative fees and fees to take the money out. Of particular importance are transfer fees. What will the fee be to transfer your RDSP to another institution if you are not satisfied with your existing plan? This will be particularly important in the first few years if only a few plans are available in 2008 but a wider variety of plans appear in 2009-2010.

4.       What are the ongoing management fees?  A management fee of 2% will greatly reduce your return if the investment is making 3-4% a year.  

A RDSP is still an investment so treating it like your other investments makes common sense.  

If you have any questions on this article you can e-mail Dennis at Dmullins16@cogeco.ca 

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