RESPs are registered by the Government of Canada and through the Canada Educations Savings Grant (CESG) you can get up to $500 a year in government grants for a total of up to $7,200 (the government will match 20% of the first $2,500 contributed each year for eligible children), that’s free money in their account!
My husband and I opened an RESP for both of our boys right after they were born. We have been making regular contributions that go straight from our bank accounts to their RESP accounts along with the government’s 20% match using the RESP (Registered Education Savings Plan). I love not having to worry about it and checking their account statements every couple of months to see how quickly the money adds up.
Many times parents worry about not having enough money to contribute, but even small contributions add up quickly! Did you know that if you add $25 a week your contribution can grow to over $50,000 in 18 years? One of the major benefits of opening an RESP is the tax deferral. This means that interest income and investment growth earned within an RESP are not taxed as long as the funds remain in the plan. Any withdrawals from an RESP account are then taxed in the hands of the student, and that usually means they will pay little or no tax.
RBC makes it easy to open an RESP account. Meeting an RBC Advisor is a great first step, you can book an appointment with one here.
I hope that one day my children can decide to study any profession they choose, not having to worry about being able to afford their tuition and expenses, all thanks to their RESPs.
Disclosure: I am part of the RBC RESP Campaign with Influence Central and I receive special perks as part of my affiliation with this group. The opinions on this blog are my own.