RESPs: the kind of investment you're glad you made!
Going away as a family, as our grandmothers used to say, involves a lot of business. We quickly go from a state where we only had our needs to think about to a state where we have to think for others, in the short, medium and long term. A decision that we make at a specific moment can have positive consequences in the long term. This is the case with the Registered Education Savings Plan (RESP). For you, future parents or parents of young children, to avoid adding to your sleep debt, we thought we'd explain why RESPs are really worthwhile!
The Education Savings Plan
"The child is not born and already we have to think about university or college?".
No joke: yes.
Why do we suggest you think about an RESP? Because the first few months of a child's life are a roller coaster. Your attention will be elsewhere (and we understand). If you've done your research first and even met with a member of our team, you can have peace of mind about your strategy to build a comfortable cushion for your child's future education.
The RESP is a great savings and investment product! Designed to help parents save for their child's education, this type of account offers two big advantages:
It's government-sponsored, matching 20% of parental contributions, up to $500 per child per year, and a lifetime maximum of $7,200. We've done the math for you. To get the $500 subsidized by the government, you have to contribute $2,500 per year, which equals $96.15 per pay period. Divided between two parents, we're talking about less than $50 every two weeks, so we don't have to worry about our finances when our baby is old enough to go to post-secondary school.
The parent contributes and accumulates earnings (interest) that are not taxable.
A long-term investment like an RESP is less flashy than a new television or a fancy espresso machine. That said, it's an effective way to buy peace of mind at a low cost and ensure your child has invaluable support when it comes time to think about the next step after high school.
Do you have any questions or would you like some clarification on the terms and conditions of this product? Make an appointment with us!
This article was prepared by Pierre Dauth, who is a mutual fund representative with Investia Financial Services Inc. This is not an official publication of Investia Financial Services Inc. The views (including any recommendations) expressed in this article are those of the author alone, and are not necessary those of Investia Financial Services Inc.