5. RESP Industry In Canada*
$47 Billion in
RESP
5.4 Million
Beneficiaries
$9.7 Billion in
Gov’t Grants
*Annual Statistical Revue Government of Canada
6. What is an RESP?
• Education Savings Plan Registered with Canada Revenue Agency
• Contributions + Grants Grow Tax Free.
How Does RESP work?
• You Contribute Monthly or Annually or One-time Payment Amounts In Your RESP
• Free Money (Government Grants) Matches 20% of the Amount You Contribute in your RESP
(up to $7200 per child, a maximum of $500 per year, or $1000 in catch-up cases)
• Total Amount (Your Contributions Plus Government Grants) are Invested and Grow Tax Free
• Your Kid can go to university in Any Part of the World
RESP can remain open for 36 years.
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7. Where are RESP’s Offered?
• Specialized Companies for RESPs
• Banks
• Insurance Companies
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8. What Sort of Investments and Risks?
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Savings Account (Very Low Risk)
Govt Bonds, and Fixed Income (National Policy 15) (Low to Moderate Risk)
Guaranteed Investment Certificates (N15) (Low to Moderate Risk)
Mutual Funds/Stocks (Moderate to High Risk)
Make sure you get advice on the most suitable investment category to
your situation
National Policy 15 Recommends low to moderate Risk for RESPs
Investments
9. Choosing the Right RESP:
Individual Plans
One beneficiary (child) which can be changed to a sibling at any time. Multiple
subscribers possible: Parents, grandparents or even someone not related to the
child.
Family Plans
Multiple beneficiaries possible, can be opened by parents or grandparents
Group Plans
Grouping of children by age. Strict guidelines apply to transferring to other plans and
to prescribed timing of enrollment in an approved post-secondary institution
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Make sure you get advice on the most suitable plan to your situation so
as not to burden yourself
10. Example for Yearly Contributions Until Age 18
• Age: 6 Years
• Yearly Contributions: $3000
• Annual Rate of Return: 4%*
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Your Contribution You Receive
$36,000 $36,000
$7,200
$16,432
Contribution Gov't Grants Earnings
$59,632
Rate
of Return
66%
*Assumption based on low to moderate risk investment strategy (Gov’t Bonds and Guaranteed Investment Certificates) recommended by the Securities laws in Canada for RESP Investments
11. Example for Monthly Contributions Until Age 18
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
You Contribute You Receive
$28,800
$28,800
$5,760
$12,517
Contributions Govt Grants Earnings
Rate
of Return
63%
$47,077
*Assumption based on low to moderate risk investment strategy (Gov’t Bonds and Guaranteed Investment Certificates) recommended by the Securities laws in Canada for RESP Investments
• Age: 6 Years
• Monthly Contributions: $200
• Annual Rate of Return: 4%*
12. Example for Yearly Contributions Until Age 18
• Age: 11 Years
• Yearly Contributions: $5000
• Annual Rate of Return: 4%*
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Your Contribution You Receive
$35,000 $35,000
$7,000
$10,242
Contribution Gov't Grants Earnings
$52,242
Rate
of Return
49%
*Assumption based on low to moderate risk investment strategy (Gov’t Bonds and Guaranteed Investment Certificates) recommended by the Securities laws in Canada for RESP Investments
13. Example for Monthly Contributions Until Age 18
$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
You Contribute You Receive
$28,800
$28,800
$5,760
$7,292
Contributions Govt Grants Earnings
Rate
of Return
45%
$41,852
*Assumption based on more conservative view
• Age: 6 Years
• Monthly Contributions: $200
• Annual Rate of Return: 2.5%*
14. Example for Yearly Contributions Until Age 18
• Age: 6 Years
• Yearly Contributions: $3000
• Annual Rate of Return: 2.5%*
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Your Contribution You Receive
$36,000 $36,000
$7,200
$9,615
Contribution Gov't Grants Earnings
$52,815
Rate
of Return
47%
*Assumption based on a more conservative view
Editor's Notes
I would like to tell you about a great way to start saving for the post-secondary education of your children.
Can you believe that there is free, no strings attached money, available from the Government of Canada for post-secondary education? Well believe it because it’s true! You could get up to $ 2,000 for education savings, with no contributions required!
Every parent has hopes and dreams for their children and a good post-secondary education is where future aspirations start.
By the end of this information session you will have enough knowledge to set your children on the path to realizing their full potential and becoming part of a talented work-force and a comfortable life style.
How does the government help parents plan for post-secondary education?
By offering incentives such as the Canada Learning Bond, the Canada Education Savings Grant and the Additional Canada Education Savings Grant, when an RESP is opened.
An RESP is a Registered Education Savings Plan that allows contributions to grow tax free.
Let’s take a closer look at these incentives.
So now you know that the federal government offers free money to help parents save early for their children’s post-secondary education and you are probably wondering how to get that free money!
All you need to do is go to a financial institution and open an RESP. You have already heard me mention RESPs but maybe you aren’t too sure what they are.
RESP stands for Registered Education Savings Plan. It’s a plan that’s registered with Canada Revenue Agency and allows contributions to accumulate tax free.
For our purposes, the most important reason for opening an RESP is to gain access to the Government of Canada’s savings incentives: the Canada Learning Bond and the Canada Education Savings Grant.
There are of course many others benefits:
An RESP will help you plan early while creating an environment where your child will be encouraged to aspire to attend post-secondary education.
Having education savings increases parental expectations for their children’s future.
The compound interest accumulated will help the savings grow.
And while government contributions may not be enough to cover all expenses, they will lighten a student’s debt load.
An RESP can remain open for 36 years giving the beneficiary ample time to decide when they want to start and what type of post-secondary education they wish to pursue. If they want to work a few years first to save even more money into their RESP, they can.
Let me explain briefly about the different types of RESPs.
An Individual Plan is for one child and no relationship to the subscriber is required. For example, the beneficiary can be a friend’s child, a favorite nephew or anyone you choose.
Family Plans can only be opened by parents or grandparents. The beneficiaries must be siblings. i.e. brothers and sisters, including adopted children.
Finally, there are Group Plans. This is a grouping of individual plans for beneficiaries born in the same year. Due to fees, restrictions and regular monthly payments this type of plan does not necessarily have the flexibility needed for families with modest to middle incomes.
Make sure you explore the possibilities and have enough information to choose what is best for your circumstances.
So now you know that the federal government offers free money to help parents save early for their children’s post-secondary education and you are probably wondering how to get that free money!
All you need to do is go to a financial institution and open an RESP. You have already heard me mention RESPs but maybe you aren’t too sure what they are.
RESP stands for Registered Education Savings Plan. It’s a plan that’s registered with Canada Revenue Agency and allows contributions to accumulate tax free.
For our purposes, the most important reason for opening an RESP is to gain access to the Government of Canada’s savings incentives: the Canada Learning Bond and the Canada Education Savings Grant.
There are of course many others benefits:
An RESP will help you plan early while creating an environment where your child will be encouraged to aspire to attend post-secondary education.
Having education savings increases parental expectations for their children’s future.
The compound interest accumulated will help the savings grow.
And while government contributions may not be enough to cover all expenses, they will lighten a student’s debt load.
An RESP can remain open for 36 years giving the beneficiary ample time to decide when they want to start and what type of post-secondary education they wish to pursue. If they want to work a few years first to save even more money into their RESP, they can.
Let me explain briefly about the different types of RESPs.
An Individual Plan is for one child and no relationship to the subscriber is required. For example, the beneficiary can be a friend’s child, a favorite nephew or anyone you choose.
Family Plans can only be opened by parents or grandparents. The beneficiaries must be siblings. i.e. brothers and sisters, including adopted children.
Finally, there are Group Plans. This is a grouping of individual plans for beneficiaries born in the same year. Due to fees, restrictions and regular monthly payments this type of plan does not necessarily have the flexibility needed for families with modest to middle incomes.
Make sure you explore the possibilities and have enough information to choose what is best for your circumstances.