I will address two points

# 2 The “10% ” returns rates vary for different times one if you look at Jan 1 1999 to Dec 31 2011 the S& P returns were 3.85% as one example. check out http://www.moneychimp.com/features/market_cagr.htm

#7 If use an example of a 20 pay insurance policy for a five year old male at $2500/year the cash value is $67,880 at age 25 and death benefit of $435,948
At age 55 the death benefit is $1,331,919 and the cash value is $592,031 This keeps going in value over one’s life time.

The insurance idea is not to say RESP are bad (the 20% is great) but later in life the money is spent. The “strings” is in order to keep the policy alive one can borrow up to 90% of the cash value. Also one would want to repay the amount borrowed over time. Lets face in a $1,000,000 plus policy will cost a lot at age 55.

I can comment on the other points but I will see if you are open minded here on other ideas. I sent an e-mail to you on a book you may want to read, let me know if you got it.

Brian

1) Fees are going up faster than inflation. This is irrelevant as to the best way to save money.

2) What assumptions do you make to say that 7% is not a probable rate of return? The S&P 500 has returned over 10% since its inception. There is still plenty of growth potential in the world’s markets.

3) If a parent is disabled, the vast majority of them will get an insurance settlement, depending on their employment. This can then be invested on the child’s behalf, or in an RRSP however they see fit.

4) So your withdrawing money from an insurance plan, only to put it back in again at a later date? This is really what you are suggesting as a viable alternative to an RRSP or an RESP? That sounds like an insurance salesman to me, oh, and by coincidence your website is one that sells insurance.

5) I’ve seen and heard this pitch before. The money inside of insurance funds grows at a much slower rate than if you invest it on your own behalf. This is why most financial gurus (including David Chilton most notably) will advise their clients to use term insurance “and invest the rest.” Using insurance for what its meant to be used for – protection against events that are out of your control, makes much more sense than trying to use it as an investment strategy. Basic logic tells you that insurance companies take your money (the premiums you pay) and invest it, and then pay settlements out of the pot. Their profit comes out of your earnings. It has to, or insurance companies would have to run on volunteer labour!

6) You comment that withdrawing from an RESP has strings attached? It’s pretty straightforward, and there is a great feature that allows you roll the money into your RRSP if none of your children use the money (although they almost assuredly will in this increasingly information-based economy). Your proposing that taking money in and out of an insurance plan doesn’t have strings attached? Come on man…

7) I want one specific situation where any amount of money in an insurance plan would be better from an investment standpoint than in an RESP. The fact is that it does not exist. Please come bearing hard facts and quit trying to merely sell insurance, or I will forced to disallow comments from here on out Brian.

Lets start again.

Fees are going up faster than inflation. (tuition/rent/food/gas/etc.)
The 7% is not likely to happen as an average for the 18 years. (return).
RESPs are great but your case studies starting at 5 and putting $2500 per year and using reasonable increases of 5% plus per year the child is still short.

Since many readers may not understand insurance and how it works, it can be accessible and more flexible.

If a parent is disabled contributions will not be made to the plan.
Insurance does this.
If money is withdrawn from an insurance policy (the right kind) and paid back the cash value is credited as if no money was ever withdrawn.
Values on the right kind of insurance policies can never go down.
No limit on the cash value insurance policies (or at least very high).

RESPs are great because of the 20% added by the government but have limits on how you can get your money.

In the end having a mix of say RESPs and insurance maybe better, but as I said before one needs a model to see if it makes sense.