Helping your children or grandchildren with their further education is something everyone hopes to help with. Giving them the extra advantage of post-secondary education opens doors for them like no other. Having an RESP can help you save that money faster for their future.
As an example, if you contribute $2,500 each year to the RESP, you would get a 20% match contribution from the Federal government*- this is a guaranteed return on your investment. Also, you don’t end up paying tax each year on the investment as it grows within itself. When the children are eligible** to receive the money, they pay the tax which is usually at a much lower rate than what you would have paid.
*Up to the maximum Canada Education Savings Grant (CESG) of $7200 for each child available to the end of the year that the child turns 17. There are restrictions in the year that a child turns 16 and 17.
**There are requirements for eligibility for educational assistance payments.
3 Strategies To Speed Up Your Education Fund:
- Start Early. As soon as a child has a Social Insurance Number, you can open an RESP.
- Regular payments. Set up regular contributions so you save time and it becomes part of your routine.
- Focus on less risk and higher returns. Make sure your portfolio is diversified so it meets your personal goals.