1. “
Page 1 of 2 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.
The author does not provide investment advice. In order to use reproduce or convey the material herein,
in any way, written agreement must be obtained from the author or its agent Architypes Inc.
StockTakers Limited is an Alberta corporation providing information on “likeables” equities.
StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.
Man Bites Man! RESP – Raiding Even Saving Parents.
The biggest problem with savings is the rate of inflation
eating your cash savings. The reality of ‘financial
products’ is they do not work to hold value for you but
erode value of savings entrusted even more than the
erosion of inflation. A most compelling example of this
working through policy of government is the Canadian
Education Savings Grant (CESG).
A happy parent or grand-parent wants to do what they can
to help and nurture their children so they scrimp to save
for their children’s future. The Registered Education
Savings Plan (RESP) seems just the responsible thing to
do. The government in Canada offers no tax shelter for these plans but through the CESG will top-
up with 20% to as much as $500 each year.
The relevant question is whether you intended these funds be registered (but these are not tax
shelters for your contributions) so as to gain the government contribution. There is not much in that.
Introduced in 1998, the 2007 Canadian federal budget increased contribution limits, for every $100
deposited to an RESP, the federal government adding 20 per cent as a matching CESG to boost
your savings. These can be self-directed but not without using bank held government bond funds as
the income investments, which have low rates of gain. The bank annual fee eats most of the CESG
(being really an incentive for you to hand over your cash to the banks so they gain fees on the lot).
Current Government of Canada marketable bonds - average yield - over 10 years, 2.49% (other
terms are even less) on 2500 is $62.25 (less bank management fee of $50 per year) = 12.25/2500 =
0.49%. That net gain is less than inflation which has averaged 3.02% the last decade, 3.40% over
the past 17 years the same interval as a RESP is eligible to run.
What about that nice $500 contribution by the government that was taken from other taxpayers
social needs supposedly going to benefit your child’s education costs? Adding the CESG makes
What investors expect of bankers financial products is a way to secure their hard earned savings
while growing their wealth. The circularity of ‘investment talk’ one gets from fund managers and
advisors who have sold you their “goods” and taken your money to ‘safely invest’ is like what
Alice gets at the Tea Party.
“Take some more tea,” the March Hare said to Alice very earnestly.
“I’ve had nothing yet,” Alice replied in an offended tone: “so I ca’n’t take more.”
“You mean you ca’n’t take less,” said the Hatter: “it’s very easy to take more than nothing.”
Pretty much that is the case. They have taken it all before you arrived. “Alice, meet Dr. Artful
Dodger.”

2. “
Page 2 of 2 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.
The author does not provide investment advice. In order to use reproduce or convey the material herein,
in any way, written agreement must be obtained from the author or its agent Architypes Inc.
StockTakers Limited is an Alberta corporation providing information on “likeables” equities.
StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.
Man Bites Man! RESP – Raiding Even Saving Parents.
that $3000 @ 2.49% which is $74.70, less bank fee of $50 = $24.70 for a net gain of 0.823%. That
is still sabotage, not an investment.
Over the 17 years of an RESP the erosion of wealth given with best of intentions is profoundly
eaten by 3.40% inflation and only 0.823% gain. A dollar put in this fine grinding mill will leave a
mere benefit of 0.64157 of every dollar put in. That means on maturity, in
2030, a mere $1924.71 will be the value in 2030 dollars of the $3000 put into
that RESP with the CESG top-up.
Over a third of your and government money pooled into the RESP is gone. Or
look at it as just $1924.71 of the 2500 you put in, just 76.99%, is left. Nearly a
quarter of the current dollar value has been eroded. While the tax-money your
fellow taxpayers had added is completely gone right down the financial
industry corner pocket without any supposed benefit to your child due to your
money not earning an effective rate. There is no incentive for a fund manager
to do more than buy a government bond and parce it according to subscriptions.
“Easy come, easy taken,” says Jack Dawkins, The Artful Dodger.
The situation of tax-sheltered American 529 savings plans is no different than any mutual fund
product. None can show a rate of return after their fees beating inflation. The kid’s education piggy-
bank is a rich target loaded with emotion of parents having done the right thing.
Because we can, we have charitably provided small investors the means to raise their financial
futures with our ABC’s; Tax Charity; and now, BookBuilder portfolios. We provide new theory of
the firm that is logically correct and mathematically proven which markets have scientifically
proven consequences. Our “likeables” are liked by the market as they have demonstrated.
Our reasons for having any equity in our portfolios are clear, concise and consistent. The equities
we hold are “likeables” tending to gain 67% of the time. We do not make stock prices but can
reasonably respond to stock price tendencies, by our knowing the price of risk, the downside, and
buying and holding accordingly. That is new fundamentals from theory we have put into policy
obtaining 29% IRR average. Know What You Have. Have What You Know
Our view is risk averse. Of course we require a fee for doing that. Mail us for our help.
Ernst and Hans Goetze,
Architypes Inc and StockTakers Limited
Head Office
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Calgary, AB
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Toronto, ON
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