Registered Education Savings Plan - Educational Savings
What is a Registered Education Savings Plan (RESP)?
An RESP can help parents pay the cost of their kids’ education after high school. These costs are rising. A four-year college or university program in Canada now costs between $20,000 and $50,000. By 2019, that cost may rise to between $45,000 and $74,000.
How does an RESP work?
- A Registered Education Savings Plan (RESP) is a special plan that helps you save for a child’s studies after high school. Over the years, you put money into the plan and invest it so it will grow.
- When you open an RESP, you name someone who will use the money for their education. You can name a child, a grandchild, or any other family member. In some cases, you may be able to name yourself or a friend. The person you name must be a Canadian resident and have a Social Insurance Number.
- If you save for a child age 17 and under, the Government of Canada will also put money into the RESP as a grant. Getting a grant is like getting free money towards education. The grants stop at the end of the year when the child turns 17.
Why would I choose an RESP?
- You save more than you would on your own. The government grants can really add up over the years.
- It helps you stick to a savings plan. For example, with many plans you can set it up so you put in money each month.
- Your savings grow tax-free. There is no tax on the money you make investing, as long as it stays in the plan.
Learn more now
Read more about RESPs from the Ontario Securities Commission.
Remember: You don’t have to save a lot each month to open an RESP.
Even $10 a week can add up over the years. With government grants added to your savings, even a small amount will grow a lot over time.
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