Family RESP Asset Allocation

Let's start by getting the disclaimer out of the way

The information in this post does not constitute an offer or solicitation to buy or sell any financial product or service. This is not intended to provide specific financial advice to you the reader. I am not a financial professional, so please treat this post as such. Do not act or rely on the information provided below without seeking the advice of a finance professional. 

On to the main gist: how I choose the investment mix for our family RESP.

RESP = Registered Education Savings Plan

For a basic introduction to Family RESPs and how they work, read here.

Step 1: Data Gathering.

• Age of kids: 9, 9 and 3
• Anticipated age to enter college: 19
• Anticipated year of college entry: 2030, 2030, 2036

Step 2: Assumptions

• Portfolio will be a mix of stocks and bonds in ETFs/index funds
• Stocks provide high risk and potential for high growth 
• Bonds provide stability, lower risk and not a lot of growth

As kids get closer to college age, the portfolio allocation will tilt more towards bonds to preserve whatever the value is and prevent any surprises. The allocation is easier to track if the kids are the same age but they're not. In my case, I have twin girls and a toddler boy with a 6 year age gap. 

Step 3: Define portfolio allocations by age. 

Working from age 19 down, here's how I defined what the portfolio allocation should be for each age.

Step 4: Define portfolio allocation for family plan

I do this by averaging the stock vs bond allocation for the 3 kids and getting what the ratio for family plan should be and round-up or down to make things easier. For my 3 kids, this is what the asset allocation plan for their RESP looks like:

That's my process for asset allocation in a family RESP plan. To achieve the actual ratios, I use a combination of all-in-one ETFs and bond ETFs.

Hope this process is useful to someone trying to figure out the asset allocation process for family RESPs.