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Children's Education

How an RESP works

A Registered Education Savings Plan (RESP) is a dedicated savings plan to help you save for a child's education after high school.

Some things to know about RESPs:

Your savings grow tax free. There is no tax on the investment earnings, as long as they stay in the plan

If you save for a child aged 17 and under, the federal government also puts money into the RESP as a grant and/or bond

You can usually put money in whenever you want, up to a lifetime maximum of $50,000 per child. But some plans require set monthly or annual contributions

The contributions are not tax deductible. But you can withdraw them tax free from the plan at any time, for any reason

There is a wide range of investment options for RESP

Your child can take money out of the RESP when they enroll in a post-secondary institution or another qualifying education program

An RESP can stay open for up to 36 years.

CASE STUDY:   The Power of Saving Early (a tale of 2 families)

The Browns opened a Registered Education Savings Plan (RESP) when their son Jack was born last year. They will save $170 a month over the next 17 years. This is enough to get $400 in government grants each year. 

How much will they have in the plan by the time their son goes to college?

More than $70,000, if their money grows by 5% each year. That’s what the experts say it will cost to pay for Jack's education by the time he finishes high school.

The Smiths, on the other hand, started late. They opened their RESP when their daughter Rose turned 10 last year. To save enough for all of her education costs, they will have to save almost twice as much as the Browns do every month.

Lesson learned: Starting early makes it much easier to grow your RESP savings.

Contact Rob Gillrie to learn more about RESPs

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