RESP is an investment tool that allows parents to save for their child’s post-secondary education.
New parents can get carried away with buying brand name clothes, baby shoes, strollers, prom, baby cribs, bassinet ,etc. By the time your baby is one year old, you would have spent a small fortune on hosting baby showers, birthday parties and buying a lot of unnecessary consumer items.
Its important to start planning for your Child’s future as soon as they are born. by using the power of compound interest, time and frequent contributions to a RESP your child will have enough money to go to college.
You will need a social insurance number (SIN) for your child in order to open a RESP account in their name.
Congratulations, you have open a RESP for your child at age one, now you have the next 17 years to contribute to the account. If you save $50 every year at a minimum 5% rate of return the total invested would be $17,000.00.
When you open a RESP account you can receive an education savings grant of up tp $500 per year. Children from low income to middle income families could receive an additional $100 per year. the maximum lifetime of the grant is $7200.
This money is life changing for a 18 year old, they can use this money for post-secondary study, if one child doesn’t use the funds you can pass it down to the younger child, you are allowed to withdraw your contributions, minus the government grant if your child doesn’t use it for post secondary education.
Start savings for your child/children future today, 18 years goes by really fast.
Resources:
How the Registered Education Savings Plan and related benefits work together – Canada.ca
