Here's why the RESP is the best education plan ever!

RESP or Registered Education Savings Plan is an investment vehicle available to parents and caregivers to save for their children's post-secondary education. It is a savings account where you can invest and grow money while deferring tax. This savings account can be opened by parents and caregivers as soon as their child is born. RESP offers no maximum contribution limit but a lifetime maximum contribution limit of $50,000 per each child you name under the plan. The main advantage of this product is the ability to receive grants from the government through Canada Education Savings Grant as well Canada Learning Bond that is offered to low-income households.

No matter what your household’s income is, the government of Canada will grant 20% of your contributions up to $500 annual maximum for each year ($1,000 in CESG if there is unused grant room from a previous year) with a lifetime maximum of $7,200. The government also will grant an additional 20% to the first $500 of contribution annually for the family with an annual income of $49,020 or less and additional 10% for the family with an annual income of more than $49,020 but less than $98,040 (based on 2021 household income). This additional grant will be part of the lifetime maximum of $7,200. Which simply means that the lower your income is, the sooner you will receive the lifetime maximum grants. Giving you an opportunity to grow more of your money. These grants will only be received until the end of the year at which your child turns 17 years of age.

Canada Learning Bonds will pay a lifetime maximum of $2,000 and will only be granted to low-income families. The government of Canada will not require you to make any contribution in order to receive this grant. That means that just by opening an account, you can receive $500 in the first year and $100 each year the child continues to be eligible (up to and including the benefit year in which they turn 15). Which tells us that it is better to open an RESP account at the year your child was born even without making any contribution.

If you live in British Columbia, you are also eligible to receive provincial grants.

But how would I know if my child would have enough funds to use when he goes to college? What about the growth? Depending on the company you invest with, you may have the choices where to invest both your contributions and the government grants in order to achieve your goal with the help of a Financial Advisor like me. 

Book an appointment with me to know more or click here to learn the different type of Registered Education Savings Plan to know which type is best for you!