What about self-directed RESPs?

Most Canadians don't understand that the two types of RESPs, scholarship and self-directed plans, are actually subject to different legislation. Companies like Heritage Education Funds offer a scholarship plan called the Heritage Plan and it is limited by law to investing contributions in government guaranteed and fixed-income securities like Federal and Provincial Bonds, Guaranteed Investment Certificates, Term Deposits, and Government Treasury Bills, NHA Mortgages. What does this mean? This means your contributions are guaranteed to be there when your child is ready for post-secondary education. And that's very reassuring when you've worked hard and sacrificed to build an education savings plan for your children. An Optional Insurance plan is also available on the Heritage Plan that can continue to make your contributions should you die or become disabled.

Self-directed RESP plans from banks and mutual fund companies are not guaranteed and not subject to the safe investment limits that govern Scholarship Plans. The market value of your account may even drop below the amount you've contributed. You'll also have to contend with the volatility (up and downs) of the stock market and hope that times are good when you need to withdraw funds for your child's first year of university. And whether your account shows gains or losses, there are still management fees to be deducted each year - fees, which can erode investment gains.