It's never too early to start planning for your child's education. One important consideration is how will you pay for it? The sooner you start saving, the better position you will be in.
It's never too early to start planning for your child's education. One important consideration is how you will pay for it. The sooner you start saving, the better prepared you’ll be .
A Registered Education Savings Plan (RESP) is a tax efficient way to help maximize your savings for your child’s education.
Be proactive. First, ask yourself these two basic questions:
- When is your child likely to participate in post-secondary education?
- How much money will your child need for this?
Now you can start deciding what plan best suits you and your family.
RESP benefits at a glance
- The government contributes to your plan. The federal government adds to your RESP contributions (up to a maximum of $500 per year, per child) through the Canada Education Savings Grant (CESG).
- Flexibility. With no annual limit, you can invest when it suits you, up to a maximum of $50,000 per child over the lifetime of the plan.
- Tax sheltered growth. The investments in this plan are tax-sheltered, which means they can grow at a compounded rate faster than when invested in a non-registered investment account that has to pay tax on the returns it generates. When money is withdrawn from an RESP, tax will be paid at your child's income tax rate, which is typically much lower than yours.
Mutual funds provide diversification and choice for your RESP
Your financial advisor can recommend investments for your RESP.
This commentary contains information in summary form for your convenience, published by Sun Life Global Investments (Canada) Inc. Although this commentary has been prepared from sources believed to be reliable, Sun Life Global Investments (Canada) Inc. cannot guarantee its accuracy or completeness and is intended to provide you with general information and should not be construed as providing specific individual financial, investment, tax, or legal advice. The views expressed are those of the author and not necessarily the opinions of Sun Life Global Investments (Canada) Inc. Please note, any future or forward looking statements contained in this commentary are speculative in nature and cannot be relied upon. There is no guarantee that these events will occur or in the manner speculated. Please speak with your professional advisors before acting on any information contained in this commentary.
© Sun Life Global Investments (Canada) Inc., 2020. Sun Life Global Investments (Canada) Inc. is a member of the Sun Life Financial group of companies.