Thinking about opening a registered education savings plan (RESP) for your child? Find out about government incentives that can help you invest more in their future.
A financial boost
To encourage education savings, the Government of Canada and some provincial governments provide annual grants to supplement your contributions to your child’s RESP. Combined with regular contributions, this generous government assistance deposited directly in your RESP can give your savings a significant boost and help you invest more in your child’s future. The federal government offers a grant of 20% of deposited contributions and the government of Quebec adds 10% of your contributions, up to a certain maximum.
Example If you invest $2,500 in one year, you’ll receive a grant of $750. For each $100 contribution towards your child’s studies, the two levels of government will together add a total of $30 in grants. In Quebec, this can reach up to $10,800 in grants. Do you know any investments that would provide a return of 30% in the first year?
Tax-free returns With time, these contributions will generate returns and the RESP will grow, tax free, until it is withdrawn. Tax-free returns is another important benefit.
RESPs are accessible even on a tight budget RESPs are very accessible – you can contribute as little as $25 per month. The earlier you start investing in an RESP for your child, the more your investments will grow and the higher your return will be.
Canada Learning Bond (CLB)
Are you a low-income family worried that post-secondary education will be hard for your children to access? The government of Canada supports low-income families like yours through the Canada Learning Bond (CLB).
The Canada Learning Bond allows eligible families to receive an additional grant of up to $2,000. They may also receive an additional percentage in federal and provincial grants based on the family’s income. To find out if you are eligible, please contact a financial advisor.
Our advice
To make sure you have enough money for your child’s post-secondary education and to ensure their success, start saving in an RESP early. Whether you make small deposits or opt to invest more, the money you deposit will grow over time with the help of grants and tax-free returns.
The important thing is to make regular contributions to get the maximum benefit from government grants and to remember that an RESP is to education what a registered retirement savings plan (RRSP) is to retirement.
When you’re ready to invest, give me a call! I can answer any questions you may have and help you make the best choices for your situation and your budget.