What are the best options for an RESP for my 2 year old kid?
Since your child is 2, he has a long time horizon for investment.  Assuming the savings will be used at age 19, that's 17 years.  So, I think your best bet is to invest primarily in equities (i.e. stock-based funds) and inside an RESP. Why equities?  Historically, equities have outperformed debt and cash over longer time periods.  But, equities can be volatile in the short term. So, do purchase some fixed-income investments (e.g. 30% government bonds and money market funds), and do also spread your equity money around as well -- e.g. buy some international funds in addition to Canadian funds.  Rebalance every year, and as your child gets closer to university age, start shifting some assets out of equities and into fixed-income, to reduce risk.  You don't want the portfolio torpedoed by an economic crisis the year before the money is required! Next, why inside an RESP? Finally... what if your kid doesn't attend post-secondary education?  First, you should probably get a Family RESP, not a Group RESP.  Group RESPs have strict rules and may forfeit contributions if your kid doesn't attend.  Have a look at Choosing the Right RESP and Canadian Capitalist's post The Pros and Cons of Group RESP Plans. In a Family plan, if none of your kids end up attending post-secondary education, then you forfeit the government match money -- the feds get it back through a 20% surtax on withdrawals.  But,  you'll have the option of rolling over remaining funds into your RRSP, if you have room.
The above is very true, but the biggest bang for your buck can also be in the RESP, assuming you qualify for the grant of 20% per year...it's hard to beat free money from the government...in this account, your investment grows, and the growth and grant is taxed in the hands of the child when it is withdrawn. (Normally, they dont have much income at this point, so pay little or no tax)  However, you do not get any income tax deduction or tax break at the time you make the deposit. I've found a much better time at the independent toy stores.   My daughter is into some unique things at her age.   Graphic novels and weird dolls.   At 11 toysrus doesn't cut it.  It's a shame though, babies r us was a great place for our baby needs when we had kids.  In the end it is sad to see a toy store chain go down.   Kids need the stuff that toy stores have to offer.   Kids are too engrossed in digital media.    They need the 3d world that toys give them, and it's really tragic to see where kids are going. I am not sure whether this hold in all countries, but at least in the Netherlands my bank allows for investment in funds without charging transaction costs. The downside is that these funds charge an annual fee of about 1%, but for the amounts you are talking about this definitely sounds more attractive than the alternative. As an alternative, you could ofcourse just take care of the transaction costs. That way your child can see their funds develop as you put it into different stocks without being distracted by the details. Of course you feel the 'pain' but I believe the main lesson stands out most this way. "(Since you used the dollar sign without any qualification, I assume you're in the United States and talking about US dollars.) You have a few options here. I won't make a specific recommendation, but will present some options and hopefully useful information. Here's the short story: To buy individual stocks, you need to go through a broker. These brokers charge a fee for every transaction, usually in the neighborhood of $7. Since you probably won't want to just buy and hold a single stock for 15 years, the fees are probably unreasonable for you. If you want the educational experience of picking stocks and managing a portfolio, I suggest not using real money. Most mutual funds have minimum investments on the order of a few thousand dollars. If you shop around, there are mutual funds that may work for you. In general, look for a fund that: An example of a fund that meets these requirements is SWPPX from Charles Schwabb, which tracks the S&P 500. Buy the product directly from the mutual fund company: if you go through a broker or financial manager they'll try to rip you off. The main advantage of such a mutual fund is that it will probably make your daughter significantly more money over the next 15 years than the safer options. The tradeoff is that you have to be prepared to accept the volatility of the stock market and the possibility that your daughter might lose money. Your daughter can buy savings bonds through the US Treasury's TreasuryDirect website. There are two relevant varieties: You and your daughter seem to be the intended customers of these products: they are available in low denominations and they guarantee a rate for up to 30 years. The Series I bonds are the only product I know of that's guaranteed to keep pace with inflation until redeemed at an unknown time many years in the future. It is probably not a big concern for your daughter in these amounts, but the interest on these bonds is exempt from state taxes in all cases, and is exempt from Federal taxes if you use them for education expenses. The main weakness of these bonds is probably that they're too safe. You can get better returns by taking some risk, and some risk is probably acceptable in your situation. Savings accounts, including so-called ""money market accounts"" from banks are a possibility. They are very convenient, but you might have to shop around for one that: I don't have any particular insight into whether these are likely to outperform or be outperformed by treasury bonds. Remember, however, that the interest rates are not guaranteed over the long run, and that money lost to inflation is significant over 15 years. Certificates of deposit are what a bank wants you to do in your situation: you hand your money to the bank, and they guarantee a rate for some number of months or years. You pay a penalty if you want the money sooner. The longest terms I've typically seen are 5 years, but there may be longer terms available if you shop around. You can probably get better rates on CDs than you can through a savings account. The rates are not guaranteed in the long run, since the terms won't last 15 years and you'll have to get new CDs as your old ones mature. Again, I don't have any particular insight on whether these are likely to keep up with inflation or how performance will compare to treasury bonds. Watch out for the same things that affect savings accounts, in particular fees and reduced rates for balances of your size." Probably the biggest tax-deferment available to US workers is through employee-sponsored investment plans like the 401k.  If you meet the income limits, you could also use a Traditional IRA if you do not have a 401k at work.  But keep in mind that you are really just deferring taxes here.  The US Government will eventually get their due. :) One way which you may find interesting is by using 529 plans, or other college investment plans, to save for your child's (or your) college expenses.  Generally, contributions up to a certain amount are deductible on your state taxes, and are exempt from Federal and State taxes when used for qualifying education expenses.  The state deduction can lower your taxes and help you save for college for your children, if that is a desire of yours. Question One: Question Two: Your best reference for this would be a brokerage account with data privileges in the markets you wish to trade. Failing that, I would reference the Chicago Mercantile Exchange Group (CME Group) website. Question Three: Considering future tuition costs and being Canadian, you are eligible to open a Registered Education Savings Plan (RESP). While contributions to this plan are not tax deductible, any taxes on income earned through investments within the fund are deferred until the beneficiary withdraws the funds. Since the beneficiary will likely be in a lower tax bracket at such a time, the sum will likely be taxed at a lower rate, assuming that the beneficiary enrolls in a qualifying post secondary institution. The Canadian government also offers the Canada Education Savings Grant (CESG) in which the federal government will match 20% of the first $2500 of your annual RESP contribution up to a maximum of $500. Group RESPs are a bit like a true mutual insurance company. You all pay into the fund, and then, depending on the number of kids that are in school that particular year, you get paid a certain amount. Advantages could be that if you end up with one or two years of only your kid in school and nobody else's in that age bracket, you get more money. Disadvantage for the same-reverse reason also could be true. Another advantage of regular programs, unlike pooled, is that if you do not use all the money, then some/all of the remaining funds may be transferable to an RRSP. Personally I would not invest in one, unless it was more like a specific investment-club that I knew everybody. "I found this great resource at MarketWatch.com - a listing on online games that help parents teach kids about saving and finance, set up by age group. Here's an example of some of the content: For children six to nine: www.fleetkids.com, sponsored by the Fleet Bank, has great games -- like ""Buy lo, Sell hi"" and ""Chunka Change"" -- that teach kids about spending and saving. Kids can compete for prizes such as computers and backpacks for their schools." Have you looked at 529 plan yet? There are tax benefits with it and you can roll over the remaining funds from your first child's account into your second child's, etc. Read this article to get yourself up to speed for this plan. Coverdell Education Savings Account is another plan you can look at. The Wikipedia article talks about the similarities and differences, so I won't repeat here. We are a pretty average (professional, used to be fully two-income) family. I have gone part-time (plus a total career change) to be more involved at home - that's minus 50K from our family budget a year. Montessori for the younger one is - 10K. Violin (-5K) and piano (-5K) lessons for each kid... summer science camps... summer golf/tennis plus equipment... dance/sports all year round are around 10K too. We are looking at an 80K hole in our budget (compared to what we could have had). Plus by now I would have been probably more advanced in my previous career had I stayed there, so the hole is potentially even greater. Have you looked at conventional financing rather than VA?  VA loans are not a great deal.  Conventional tends to be the best, and FHA being better than VA.  While your rate looks very competitive, it looks like there will be a .5% fee for a refinance on top of other closing costs.   If I have the numbers correct, you are looking to finance about 120K, and the house is worth about 140K.  Given your salary and equity, you should have no problem getting a conventional loan assuming good enough credit.   While the 30 year is tempting, the thing I hate about it is that you will be 78 when the home is paid off.  Are you intending on working that long?  Also you are restarting the clock on your mortgage.  Presumably you have paid on it for a number of years, and now you will start that long journey over. If you were to take the 15 year how much would go to retirement?  You claim that the $320 in savings will go toward retirement if you take the 30 year, but could you save any if you took the 15 year? All in all I would rate your plan a B-.  It is a plan that will allow you to retire with dignity, and is not based on crazy assumptions.  Your success comes in the execution.  Will you actually put the $320 into retirement, or will the needs of the kids come before that?  A strict budget is really a key component with a stay at home spouse. The A+ plan would be to get the 15 year, and put about $650 toward retirement each month.  Its tough to do, but what sacrifices can you make to get there?  Can you move your plan a bit closer to the ideal plan? One thing you have not addressed is how you will handle college for the kids.  While in the process of long term planning, you might want to get on the same page with your wife on what you will offer the kids for help with college.  A viable plan is to pay their room and board, have them work, and for them to pay their own tuition to community college.  They are responsible for their own spending money and transportation.   Thank you for your service. My son is in a similar situation where he is 21 and in college. My wife and I claimed him as a dependant on our taxes last year. He had still been able to get some student loans as a dependant as well as scholarships. I have told him that we will not cosign on a loan for him. It isn't because we don't like our son, it is simply because too many unexpected things can happen.  He has been working multiple jobs which is one thing I would suggest as well as donating plasma for extra money to have a social life. As an electrical engineering major he doesn't have much time to be social. He cuts rent by having roommates and does most of his own cooking to help with food costs.  The main thing he does to keep his costs under control is attends a school that isn't outrageously expensive.  An expensive school does not offer as much benefit for an undergrad degree as it might for a graduate degree.  Another option is to look for a job that had some sort of tuition assistance.  Another option along that same line is look into military service either active duty or reserves as there is tuition help to be found there. There are options that don't involve debt. As a side note my son used a student loan last year however, this coming year he has his budget figured out and he will not be needing one at all. First, don't borrow any more money.  You're probably bankrupt right now at that income level.  2k/month is poverty level income, especially in some of the higher cost of living areas of California.  At $2k per month of income, and $1300 of rent and utilities, you've only got 700 a month for food.  The student loans are probably in deferment while your husband is in school.  If so, keep them that way and deal with them when he lands a career track goal after grad school.   The car loan is more than you can afford.  Seriously consider selling the car to get rid of the note.  Then use the cash flow that was going to the car loan to pay off the 'other' debt.  A car is usually a luxury, but if it is necessary, be sure it is one that doesn't include a loan.   Budget all of your income (consider using YNAB or something like it).  Include a budget item to build an emergency fund.  Live within your means and look for ways to supplement your income.  With three of your own, you'd probably make an excellent baby sitter. As for the inheritance, find a low risk, liquid investment, such as 12 month CDs or savings bonds.  Something that you can liquidate without penalty if an emergency arises.  Save the money for if you get into a situation where there is no other way out.  Hopefully you can have your emergency fund built up so that you don't need to draw on the inheritance.   Set a date, grad school + landing + 90 days.  If you reach that date and haven't had to use the inheritance, and you have a good emergency fund, put the inheritance in a retirement fund and forget about it. Why retirement fund and not a college fund for the kids?  The best gift you can give them is to remain financially independent throughout your life.  If you get to the point where you are fully funding your tax advantaged retirement savings, and you are ready to start wealth-building, that is the time to take part of that cash flow and set it aside for college funds. I don't know of any financial account that offers that kind of protection. I'm going to echo @Brick and say that if you need that level of restrictions on the money, you should talk to a lawyer. Your only option may be to setup a trust. If you are willing to go with a lower level of restrictions on the account, a 529 plan could do the job. A 529 Plan is an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. It will be in your daughters name, and has the benefit of being tax advantaged, unless its used for non educational expenses. Since your daughter is a minor, there would have to be a custodian for the account that manages it on her behalf. The penalty for using it for non educational expenses might suffice to keep the custodian from draining the account, and I believe the custodian has a fiduciary duty to the account holder, which would open them up to lawsuits if the custodian did act in a way that was detrimental to your child. Look at your options with a 529 program. If the money is used for education expenses: that currently includes tuition, room & board (even if living off campus), books, transportation; it grows tax free. Earnings are not subject to federal tax and generally not subject to   state tax when used for the qualified education expenses of the   designated beneficiary, such as tuition, fees, books, as well as room   and board. Contributions to a 529 plan, however, are not deductible. If it is a 529 associated with your state you can also save on state taxes. You can make contributions on a regular basis, or ad hoc. Accounts can even be setup by other relatives. I have used a 529 to fund two kids education. It takes care of most of your education expenses.  529 programs are available from most states, and even some of the big mutual fund companies. Many have the option of shifting the risk level of the investments to be more conservative as the kids hit high school.  Some states have an option to have you pay  a large sum when the child is small to buy semesters of college. The deal is worth considering if you know they will be going to a state school, the deal is less good if they will go out of state or to a private college.  The IRS does limit the maximum amount that you can contribute in a year an amount that exceeds the 14,000 annual gift limit: If in 2014, you contributed more than $14,000 to a Qualified Tuition   Plan (QTP) on behalf of any one person, you may elect to treat up to   $70,000 of the contribution for that person as if you had made it   ratably over a 5-year period. The election allows you to apply the   annual exclusion to a portion of the contribution in each of the 5   years, beginning in 2014. You can make this election for as many   separate people as you made QTP contributions One option at the end is to take any extra money at graduation and give it to the child so that it can be used for graduate school, or if the taxes and penalties are paid it can be used for that first car. It can even be rolled over to another relative.