The document presents an educational guide on planning for a child's post-secondary education, emphasizing the importance of saving and the various options available such as Registered Education Savings Plans (RESPs), tax-free savings accounts (TFSAs), and insurance products. It discusses government grants like the Canada Education Savings Grant and the Alberta Centennial Education Savings Grant, examining their benefits, eligibility, and contribution limits. The document also provides real-world examples outlining the financial implications of attending college or university, aiming to inform parents about effective strategies to secure their children's educational future.

1. Pieter J. Demeester Provide the key to a first
Wealth and Risk Management
Consultant class education
Investors Group Financial Services, Inc .
 A+ solutions to fund your child’s post-secondary
education

2. This Presentation
 Is provided by Investors Group Financial Services Inc. (in Québec, a financial
services firm).
 Is provided by Investors Group Securities Inc. (in Québec, firm in financial
planning).
 Written and published by Investors Group as a general source of information only.
It is not intended as a solicitation to buy or sell specific investments, nor is it
intended to provide tax, legal or investment advice. Readers should seek advice
on their specific circumstances from an Investors Group Consultant.
 The Canada Education Savings Grant and Canada Learning Bond are provided by
the Government of Canada. CLB eligibility depends on family income levels. The
Alberta Centennial Education Savings grant is provided by the Government of
Alberta. The Quebec Education Savings Incentive is provided by the Government
of Quebec.
 Commissions, fees and expenses may be associated with mutual fund
investments. Read the prospectus before investing. Mutual funds are not
guaranteed, values change frequently and past performance may not be
repeated.
 Insurance products and services distributed through I.G. Insurance Services Inc.
(in Québec, a Financial Services Firm). Insurance license sponsored by The Great-
West Life Assurance Company (outside of Québec).
 ™Trademarks) owned by IGM Financial Inc. and licensed to its subsidiary
corporations.
2

3. Introduction
 Today’s Objective:
 To discuss the importance of planning for a child’s education and
the methods in which you can save.
 Particular attention is paid to Registered Education Savings
Plans (RESPs).
 Today’s Agenda:
 Impact of education
 Cost of education
 Options to save for a post-secondary education
 Features and benefits of RESPs
 Beyond RESPs: Maximize your savings
3

4. Why save?
 Opportunities for better
employment usually increase
with higher education.
 The cost of post secondary
education is skyrocketing.
 Long-term planning can
overcome the financial
burdens of higher education.
4

5. Impact of Post-Secondary Education
Average earnings based on highest level of schooling:
Less than high school $32,029
High school $37,403
Trade certificate/diploma $39,996
College certificate/diploma $42,937
University – Bachelor level $56,048
University – Post-bachelor level $66,535
Source: 2006 Census – Statistics Canada. Last modified 04/01/2010.
5

6. Costs do go up over time
What could your child’s annual tuition be in 10, 15 and 20 years?
Estimated costs: Today 10 years 15 years 20 years
College program $1,900 $3,095 $3,950 $5,041
University program $4,917 $8,009 $10,222 $13,046
$200- $326- $416- $531-
Apprenticeship program
$800 $1,303 $1,663 $2,123
Assuming a 5% per year increase.
Source: Building futures planning guide, CFEE.
6

7. The Khans’ story
 The Khans’ 18 year old son, Jamaal, plans to attend university
next year. He will live on campus for the entire four year
degree program. What will it cost?
Education costs for four years $4,917 a year x 4 years = $19,668
Living costs (rent, food, internet, and so on) $11,000 a year x 4 years = $44,000
Other costs (books, student fees, and so on) $3,000 a year x 4 years = $12,000
Total costs for Jamaal’s four year
university degree
$75,668
Note: These numbers are estimates only. Your child’s costs could be higher or lower.
Source: Building futures planning guide, CFEE.
7

8. How can you save?
 You can pay for a post-secondary education from the
following sources:
 Your current income at the time your child is in school,
 Your child may work,
 Awards, scholarships and grants,
 Student loans,
 Borrowed funds (from family and friends), and/or
 Your personal savings.
8

9. Education Saving Options
 Non-registered investments
 Minor accounts (investment in the name of the minor)
 Trusts:
 Formal trusts
 Informal trusts
 Tax-Free Savings Accounts (TFSAs)
 Insurance:
 Critical illness insurance on the life of child with return of
premium rider
 Permanent life insurance on the life of child
 Universal life insurance on the life of child
 Registered Education Savings Plans (RESPs)
9

10. Non-registered investments
Advantages Disadvantages
 Owner retains full control  Owner pays tax on income
and capital gains
 Can use proceeds for any
purpose at any time
10

11. Education Savings Options
Option Advantages Disadvantages
 Child pays tax on all capital  Loss of control
gains and income earned after
 Parent/Grandparent pays tax on income until
Minor age 18
child is 18
Accounts  Can use proceeds for any
 Access to accounts may be restricted while
purpose
child is a minor
 Trustee has full control (subject  Expense set-up (legal & accounting fees)
to trust document)
Formal  Parent/Grandparent pays tax on income until
 Child pays tax on capital gains child is 18 (unless it’s the child’s money)
Trusts and compound interest (if
irrevocable)
 Can use funds for any purpose  Lack of clarity – do you even have a trust
(not necessarily education)
 May lose control at age 18/19 (is it an
Informal irrevocable gift?)
Trusts  Lack of certainty on who pays the tax (is it an
irrevocable gift?)
 Parents may not approve of use of proceeds
11

12. Tax-Free Savings Accounts (TFSA)
Advantages: Disadvantages:
 Control retained by  TFSA holder must be 18+:
parent/grandparent uses the parent’s TFSA
contribution room
 No tax payable on
investment or withdrawals  Contribution limits ($5,000
per year, indexed)
 Can use funds for any
purpose (not necessarily
education)
 Withdrawals increase TFSA
contribution limit for the
following year
12

13. Insurance Options
Type of Advantages Disadvantages
Coverage
Life insurance on child exists from day one Amount you invest is subject to financial and
medical underwriting
Low guaranteed premiums locked in for life
Potential income tax consequences regarding
Permanent Guaranteed Cash Values
withdrawals. If withdrawals occur after
Life Tax: cash and fund values grow tax sheltered within ownership, then taxable to the child
the policy until withdrawn If Participating, dividend values may be
Funds withdrawn can be used for any purpose subject to fluctuation and are not guaranteed
Life insurance on child exists from day one Amount you invest is subject to financial and
medical underwriting
Low premium locked in for life
 Potential income tax consequences regarding
Choice of investment options for accumulation
Universal within the policy
withdrawals. If withdrawals occur after
ownership, then taxable to the child
life Funds withdrawn can be used for any purpose
Fund value is not guaranteed and is
Tax: No tax on investment until withdrawn and dependent on investment options selected
death benefit proceeds are tax free
Provides critical illness insurance Amount you invest is subject to financial and
medical underwriting
Low guaranteed premiums locked in at young age
Critical No values available for withdrawal until age
Refund of premium at age 25 not taxable, and can
Illness be used for any purpose
25
Can continue coverage after Age 25
13

14. Registered Education Savings Plan (RESP)
Advantages Disadvantages
 Control  Use of growth, grants
restricted
 Tax
 No tax until withdrawals begin  Contribution limits
 Child pays tax on growth, grants
 Contributions come out
tax free
 Can use contributions for any
purpose
 Potential for free money
(government grants)
 Options available if the child
does not go on to school
14

15. RESPs - The Main Benefits
 Free money available from government grants,
 Canada Education Savings Grant (CES Grant)*
1. Basic
2. Additional
 Canada Learning Bond (CLB)*
- Paid where a child is born in 2004 or later and child’s family is
receiving the National Child Benefit supplement
- Amount is $500 in the first year a child qualifies and $100 per year
for remaining eligible years up to age 15
- Not a matching program; no contributions required
 Tax deferred accumulation of earnings, and
 Ability to split income with the beneficiary.
*CES/CLB provided by Government of Canada
15

16. RESPs - How much can be contributed?
 Contributions of up to $50,000 are allowed for each child
over their lifetime.
 No contributions are permitted after the 31st year following
the year of the plan’s establishment.*
 Plan must be terminated after the 35th year following the year
of the plan’s establishment.*
*These time limits can be extended by an additional 4 years (contributions) or 5
years (plan termination) in certain cases where the beneficiary is disabled.
16

17. Basic CES Grant
 Basic CES Grant room accumulates & carries forward
 $400/year from earlier of year of birth or 1998, through 2006
 $500/year from earlier of year of birth or 2007, onwards
 Amount of Basic CES Grant payable = the lesser of:
 20% of annual contributions,
 The child’s CES Grant room, or
 $1,000
 Only the first $5,000 of annual contributions have the
potential to receive Basic CES Grant
If your child is a little older, it’s not too late to
take advantage of the free money!
17

18. Example of Basic CES Grant carry forward
 Ginette was born in 2005, but had no RESP until 2010.
 Room accumulated to end of 2009 = ($400 * 2) + ($500 * 3) =
$2,300
 Ginette’s parents can “catch up” by contributing
$5,000/year from 2010-2013, then $800 in 2014, and then
$2,500/year until Ginette’s $7,200 lifetime limit is reached.
Year Basic CES Basic CES Contribution Basic CES Basic CES
Grant Grant Grant Grant
room room received room to
generated available carry
forward
2005-2009 2,300
2010 500 2,800 5,000 1,000 1,800
2011 500 2,300 5,000 1,000 1,300
2012 500 1,800 5,000 1,000 800
2013 500 1,300 5,000 1,000 300
2014 500 800 4,000 800 0
2015 500 500 2,500 500 0
18

19. Additional CES Grant
 Additional CES Grant room does not accumulate – if not used
in the year, it will not carry forward
 Income-tested: only families in “low” and “middle” income
brackets are eligible
 Only available on the first $500 of contributions
 Additional 20% (max $100) if in “low” income, i.e. < $40,970*
 Additional 10% (max $50) if in “middle” income, i.e. between
$40,970 and $81,941*
 Lifetime total CES Grant (Basic & Additional) = $7,200/child;
receiving Additional CES Grant allows you to reach that limit
sooner
*Income amounts shown are for 2010. The family net income amounts are updated each year.
Source: Building futures planning guide. CFEE, 2008.
19

20. Is it too late to start saving?
 Julie is 8 years old.
 Her parents put away $200 a month toward an RESP.
 The contribution is topped up by $40 each month through the
CES Grant.
 In ten years, her parent’s will have accumulated $39,172
based on an annual average return of 6%.
 The contributions ($24,000) can be withdrawn tax free.
 The CES Grant ($4,800) and the accumulated growth
($10,372) are paid to Julie and taxed at her rate.
Every bit you save and the grant you receive
starting now will make a difference.
The rate of return shown is used only to illustrate the effects of the compound growth rate
20
and is not intended to reflect future values of the RESP or returns on investment in the RESP.

21. Alberta Centennial Education Savings Grant
(ACES)*
 Child’s parents must be resident in Alberta.
 Child must have been born in 2005 or later.
 No matching requirements.
 One-time ACES grant of $500 payable into an RESP.
 Additional ACES grant of $100 when child turns 8, 11, or 14
if:
 the child is enrolled in school in Alberta, and
 $100 of contributions has been invested in an RESP within one
year of the application.
21 *ACES is provided by the Government of Alberta.

22. Québec Education Savings Incentive (QESI)*
 Child must be a Québec resident at the end of the year in
which the contribution is made.
 Contributions made after February 21, 2007 will be eligible to
the QESI.
 The QESI can reach a cumulative lifetime maximum of $3,600
per child.
22 QESI is provided by the Government of Québec.

23. RESP Taxation
 Contributions are not tax-deductible.
 Contributions are not taxable when withdrawn.
 Investment income (interest, dividends and capital gains) is
tax deferred while in the plan.
 Growth and government grant money are fully taxable once
withdrawn.
 Growth and government grant money paid to the beneficiary
as an educational assistance payment (EAP) is taxed in
his/her hands (likely a lower tax rate), resulting in income
splitting with the subscriber.
23

24. Value of an RESP
A $208.33 monthly contribution to an RESP for 18 years combined with a
$500 annual government grant for 14.4 years compounded at 6.5% over 18
years can provide you with a pre-tax market value of $99,018 to finance a
post secondary education.*
*Assuming a $208.33 lump sum contribution on the first of each month, a $500 annual
government grant for 14 years and a $200 government grant in year 15 providing a maximum
24 $7200 lifetime grant. Rate of return is for illustrative purposes only.

25. What type of investment is right for your RESP?
 Choosing which investments to hold inside your RESP depends
on:
 Your overall financial goals,
 Your time horizon, and
 Your tolerance for risk.
 An Investors Group RESP can deliver:
 Flexibility,
 Growth potential, and
 The opportunity to diversify your investments.
25

26. Not pursuing post-secondary education?
 A parent/grandparent that makes contributions may:
 Change the beneficiary of the RESP*,
 Transfer the RESP assets to the RESP of another
beneficiary*, or
 Withdraw the contributions tax free and pay the RESP
income to himself/herself, either:
- in cash, subject to taxation plus a special penalty tax in the
year of withdrawal, or
- directly to an RRSP, subject to a maximum of $50,000 and
having available RRSP contribution room.
26 * Certain conditions will apply.

27. Comparing Savings Options
 Nathan was born in 2008.  Parents marginal tax rate (MTR) during
 His parents have $2,500 a year to distribution is 40%.
invest for 18 years.  Nathan’s MTR during distribution is
 Nathan is eligible for Basic CES 15%.
Grant only.
 The RESP is depleted over a 4-year
 Parents marginal tax rate (MTR)
during accumulation is 40%. period (same rates of return, indexed
at 5%.
 Nathan’s MTR during
accumulation is 0%.  Each payment consists of a tax free
withdrawal of contributions and a
taxable EAP.
27

28. RESP, TFSA & Non-registered Options
RESP
 No tax during accumulation.
 Collect CES Grant.
 Withdrawals taxed at Nathan’s
rate of 15%.
Non-registered Account TFSA
 All taxable to parents at 40%.  No tax during accumulation.
 No tax during distribution.
Rate of return = 6.5% (1.5% interest, 0.5% dividends, 1.0% capital gains, 3.5% deferred growth)
The rate of return is used only to illustrate the effects of the compound growth rate and is not
intended to reflect future values of the investment or returns on investment.
28

29. End of accumulation period (Year 18)
Accumulation: $2,500/year for 18 years
$120,000
$101,461
$100,000
$86,292 $78,531
$80,000 $4 9 ,2 6 1 Income
$4 1, 2 9 2 $3 3 ,53 1 Basic CES Grant
$60,000
$7,2 0 0
$0 $0 Contributions
$40,000
$20,000 $4 5, 0 0 0 $4 5, 0 0 0 $4 5,0 0 0
$0
RESP TFSA Non-registered
Rate of return = 6.5% (1.5% interest, 0.5% dividends, 1.0% capital gains, 3.5% deferred growth)
The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future
values of the investment or returns on investment.
29

30. Distribution period (Years 19-22)
Net annual distributions, indexed at 5% over 4 years
$120,000
$101,664
$100,000 $94,970
Year 4
$ 2 7 ,3 0 5 $80,311
$80,000 $ 2 5 ,5 0 7 Year 3
$ 2 1,5 70 Year 2
$60,000 $ 2 6 ,0 0 5 Year 1
$ 2 4 ,2 9 3
$ 2 0 ,5 4 3
$40,000 $ 2 4 ,7 6 7 $ 23 ,13 6
$ 19 ,5 65
$20,000
$ 2 3 ,5 8 7 $ 2 2 ,0 3 4 $ 18 ,6 33
$0
R ES P TFSA N o n- re g is te re d
Rate of return = 6.5% (1.5% interest, 0.5% dividends, 1.0% capital gains, 3.5% deferred growth)
The rate of return is used only to illustrate the effects of the compound growth rate and is not
30 intended to reflect future values of the investment or returns on investment.

31. Beyond RESPs - $5,000/year to invest
 Combine strategies to maximize your savings.
Maximum final
value with
flexibility.
Assumptions:
Investment Return within the RESP and TFSA are both 6.5%.
31 Lump sum annual contributions on January 1 of each year.

32. Invest in their future and expand
education opportunities.
I can help:
See me about setting up an
appointment to learn how The
Plan by Investors Group™
can help provide the key to a
first class education.
Questions?
Email me at pieter.demeester@investorsgorup.com
32 “Provide the key to a first class education” © Investors Group Inc. 2010 (08/2010) C3147