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Will your children get the education they deserve? |
It's no secret that the cost of post-secondary education is rising dramatically. In fact, by the year 2020, experts predict that the cost of four years of University at a mid-level school will be over $100,000.00!
It's also an established fact that higher education determines not only your children's future earning power, but their quality of life too. In other words, it can make the difference between a lifetime of "McJobs" or the satisfaction and comfort of real, lasting and fulfilling careers. Life can be a challenge, so why not give them every advantage they can get?
But how can you possibly save enough money? Investing seems so risky. Is there an solution?
Yes! It's called an RESP. A Registered Education Savings Plan.
An RESP
is a great way to save and invest for your children's education. It works best if you start when your child is young, so your money has longer to grow.
It's simply an investment plan that allows your investment to grow tax-free until your child is ready for post-secondary education. And - it gets better! The Canadian government actually also contributes free grant money to your plan through the
Canada Education Savings Grant
to encourage you to save.
As returns earned on your RESP grow tax-free, your money grows faster than it would in a normal savings account - making an RESP the ideal way to save for your children's future.
Not all RESP plans are created equal. There are several types of RESP available, so it's very important to understand the details - such as what they are invested in, the level of risk, costs and cancellation policies. There's much more information on this site to help you determine what's best for you. Even so, it can be a little confusing and slightly overwhelming.
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Highlights of the CESG:
If you opened your RESP Plan in 1998 or later and haven't collected any Grant money yet, you are entitled to a maximum of $500 for each year you missed. These payments are not included in the calculation of your maximum contribution amounts.
If you can't contribute to your RESP for one or more years, you're still entitled to receive CESG* payments for those years. For instance, if you stop making RESP contributions for two years and then start contributing again, you'll be eligible for an additional $1000 of CESG* payments in the year you start up your plan again.
In other words, you can carry forward the maximum annual amount for each year you missed.
*CESG payments and interest will be paid to the beneficiary when he or she enrolls in an eligible post-secondary program.
With an RESP in Canada you - the contributor - get a tax break! Your savings grow tax-sheltered. |
