A Registered Education Savings Plans (RESP) is an excellent way to save for your child or grandchild’s education. If you invest $2,500 a year for 18 years inside an RESP, you can accumulate approximately $100,000 (assuming an 8% rate of return and $7,200 of Canada Education Savings Grants).
Here are a few tips to help you save as much as possible.
These articles will help you understand the options available when planning for your child's education:
- Maximize annual contributions - contribute up to $5,000 per year per beneficiary (the maximum contributions of $50,000 will be reached in 10 years).
- Take advantage of the CESG - Since 2007, $2,500 of CESG contribution room has accumulated per year for each child under 18 (special rules apply for 16 and 17 year olds) (from 1998-2006, $2,000 of CESG room was accumulated). A beneficiary may receive a lifetime CESG maximum amount of $7,200.
- Review your investments - there is no foreign content restriction on investments in an RESP.
- Contribute regularly - contributions can be made annually or, if you prefer, as often as once a month.
- Since individual RESP contribution room cannot necessarily be carried forward, be sure and make your annual RESP contribution by the deadline, December 31.
- Ensure the beneficiary has a Social Insurance Number in order to collect the Canada Education Savings Grant (CESG).
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