As a parent or grandparent, you want to see your children achieve their dreams. From the moment your child is born, their journey of learning begins. Whether your child’s path includes university, college or vocational training, financial planning is crucial to set them for success. Sooner you start, further ahead you will be when it comes to building a strong foundation for them to succeed.
How much will your child’s education cost?
You may often wonder how much you need to save for your child’s post-secondary education. Knowing the answer is the first step in developing a savings strategy. Our RESP Expert advice / tip would be to ask yourself
Mapping the right course
Once you have determined the costs associated with post secondary education, you would then need to review the strategies to answer important questions like
RESPs are most are one of the most chosen strategies as it does provide incentives from Canadian Government, including Canada Education Savings Grants (CESG) – 20% of annual RESP contributions (up to $500), Canada Learning Bond (lifetime limit $2000 per beneficiary). The lifetime RESP contribution limit is $50,000 per beneficiary.
Tax Savings – your investment is tax-sheltered while in the RESP. It is taxed in the child’s hands, who may pay little or no tax on that income.
Government Contributions – Federal or Provincial governments may provide grants and incentives to help your RESP savings grow faster.
Education Flexibility – RESP savings can be used towards a variety of post-secondary education paths (e.g. University, college, trade school and apprenticeship).
Investment choice – Based on your saving goals you could select individual plan or group plans.
With a view to maximize growth of your savings for your children post secondary education, you could must consider proven RESP strategy:
Contribute – start saving early in RESP and take advantage of generous govt. grants.
Accumulate –Your contributions and grants grow tax free under RESP.
Benefit – You receive your contributions to fund your child’s education and your child receives grants and interest/growth from RESP.
If you have already used maximum RESP contribution limit, you could also choose to invest in TFSA and have your savings grow tax free. This way you could plan and help your children realize their dream or true potential.
To know more or to discuss your specific goals, contact our RESP Expert today!
Written by Sunil Arora (Sunny) – MBA, RIBO, CAIB