Investment Services: RESP's

Higher Education- A Lifelong Advantage

We all want our children and grandchildren to have the best start in life. Post-secondary education is one way you can provide a child with greater opportunities- not only for enriching the mind, but also for a better standard of living

Statistics Canada reports that university grads earn 30% more than high school grads at younger ages and almost 90% more by age 55.

And saving for education now means that your child's life will be free of the burden of student loans after graduation

The Need to Save- Students and their families are shouldering more of the burden of financing higher education- and the burden is growing each year.

As governments spend less on post-secondary education, tuition fees will continue to rise. Since 1980, tuition fees have increased by 115%, while the average family income has risen by only 1% after inflation. (Source: Statistics Canada, Canadian Social Trends, 1999.)

The Answer?

Today's RESPs are better than ever. While your contributions to the plan are not tax-deductible, the earnings grow tax-free. You decide how you want to invest your money, and you can name anyone as a beneficiary, including yourself. And you can have more than one beneficiary by setting up a family plan.

Here's How It Works

• You can contribute up to $4,000 each year ($42,000 lifetime maximum) per beneficiary to an RESP. Your contributions are not tax-deductible.
• Contributions to the plan qualify for the Canada Education Savings Grant (CESG) – an annual top-up of 20% of your RESP contribution to a maximum of $400 per beneficiary
• All interest, dividends, and capital gains compound tax-free in the plan until withdrawn
• You choose the investments. There is no foreign content restrictions.
• When the earnings in the plan are withdrawn to pay for college or university, your beneficiary pays tax on the earnings at his or her (presumably lower) tax rate
• You can make contributions for up to 21 years (individual plans only), and under age 21 for family plans, however both individual and family plans can exist for up to 25 years
• If you contribute more than the maximum allowable contribution, you'll pay a penalty of 1% per month of the excess amount
• Contributions can be made monthly, or casual deposits can be made at your discretion
• You'll need a Social Insurance Number (we have applications in our office) to apply for the CESG

To learn more about RESP's and the Canada Education Savings Grant, call or email us today!