Funding Their Future with an RESP

Do you need an RESP?

Most parents realize that the need for our children to go through a Post Secondary Education is not a luxury, but will Need to be a Priority into the future if they want to succeed, and compete in a Global Economy. Our Children will need to become better educated and better prepared to meet the challenges of the future, and also, the future workforce. Canada as a country has an excellent Post Secondary system which is both Affordable and World Class, but Certainly not FREE…

There are a variety of ways to fund this educational cost in the future by:

  • Using your Savings Account
  • Borrowing the money
  • Hope for a Scholarship
  • or, Start an RESP
RESP Investing

Here are the top 10 Reasons Why, you would Want to Prepare for their Education with an RESP

  • Easy to Set up…

    With only 3 pieces of Paperwork including the government grant forms, setting up an RESP is as easy as the acronym itself. Using a Pre-Authorized Debit, makes sure you fund the program, and receive the government grants every single month, no hassle…

  • Free Money from the Government…

    For each year you are enrolled and contributing into the RESP Program, the government will match your contributions with a 20% Bonus. That’s up to $500 per year from the feds. Also, if you are in a lower income bracket, you may be eligible for additional Education Grants into the Program of 10%. That is an initial return on your investment of 30%! Try that with a traditional Savings Account…

  • The Money Grows…

    Over time you are able to participate in not only growth through your contributions and the government grants, but also through investment growth. Now for an RESP program to be eligible to receive government contributions, the Investment Style is generally conservative, but you can still expect growth through Investment Gains…

  • Portability…

    Many Registered Programs can be transferred to another Registered Program, so if you are not happy with your current results or your advice, be rest assured, all of the respectable RESP companies work together, and are able to transfer your assets including the Government Grants from one provider to another with little or no disruption to your education plans…

  • Education Flexibility…

    New rules have been expanded by the Federal Government to allow no-traditional uses of the RESP Account. This includes Studying Abroad, typical local Colleges and Universities, and even Apprenticeship Programs. So no matter what your educational goals may be in the future, chances are an RESP will be available for the costs of any future Educational Endeavors…

  • Tax Free Growth…

    While you are in the funding years of your RESP, the Money and Grants that are held inside the program grow entirely Tax Free! As a Savings Vehicle there are few options available outside an RESP that have this type of tax treatment. All funds are actively invested through a very conservative model, but all investment growth remains tax free through the life of the savings program…

  • Integrated with Your Plan…

    By working with your Bank Advisor or Independent Advisor, you can integrate the RESP with your entire Financial Plan, which may include an RRSP, TFSA and Life Insurance. It would make no sense to only plan an RESP without taking into account the rest of your Financial Future. What if an Education Plan could not be funded if you ran into financial difficulty due to a disability or critical illness…

  • Flexible Contributions…

    You may start your RESP program upon the birth of your child, or it may be later on in their lives. Rest assured, your contributions can be as flexible as your income with a Qualified Plan. Even money from Grandparents, Aunts and Uncles can be deposited into the account, even gifts given from Baptisms and Communions may find their way into the program if it is set up properly. Lump sum deposits may also be eligible for the government grants and you also may be able to “Catch Up” old grants that were never claimed…

  • Keep your Retirement “Out of It”

    Many of the families I see today will do whatever is necessary to send their child off for a Higher education if the opportunity presented itself. But I have also seen the money coming out of a Parents RRSP to fund that opportunity. Now it seems simple at first, it is an asset that seems to have a large amount of available cash, even when taking into account the taxes that need to be paid. When you need it, you need it. But the longer term effect of withdrawing from your RRSP means, that you are short changing your future…

  • Give your RRSP a Boost…

    Now if you have gone through your life contributing to your child’s RESP Program, and they are lucky enough to receive a scholarship, or they choose not to pursue a higher education, then take a breath, and relax. The unused portion of the RESP can be transferred in kind to the Parents RRSP! Less of course the Government contributions over the years, those have to be given back. But who cares, as you have used their Grant money over the years to earn Interest…

Balloons for an RESP program

Word of Caution…

But beware of the Balloon Toting RESP Providers you may meet at the park or a local festival…

The Plans provided by an RESP Only Provider, carry high fees, little flexibility and Sub-Par performance over their lifetimes, compared to managing this program yourself.

All good Banks and Independent Financial Advisors have far better options for today’s parents. Solutions that are also integrated with your overall financial Plan.

Final Thoughts…

When we take our Obligations that we have today, and try and fit an RESP program into them, it may seem daunting at first. As a parent myself I know that there are always ways to spend our money, and future education costs may just not be in the budget, but by putting together a plan, you should be able to utilize this great RESP program. You may need to start small in the beginning and ramp up over the years, and that’s OK. As long as you have a plan, you will be able to work towards a goal. In addition to the affordable Post Secondary Education we have here in Canada, receiving an additional $7200 from the government should be a no-brainer, but you have to start somewhere, by Believing in an RESP for your kids.

Also, you may find it a better opportunity to open up a Family RESP, if you have more than one child. The rules are exactly the same, but in the future, one child may need more money from the RESP than another, either due to a Masters Program, Out of Country costs, or Residence. A Family Plan RESP works perfectly in ensuring that everyone’s needs are taken care of…

To Apply for an RESP your child must have a SIN (Social Insurance Number) and the application link can be found below.

Get your SIN Here…

Also for those parents who focus their efforts on Supporting and Growing their child through Sports, you may find some value in reading this older Blog Post of mine,

RESP Opportunities for Youth Athletes