|Labour - Sponsored Funds|
|Guaranteed Investments (GIC)|
|RESP's (Registered Educational Saving Plan)|
|RRIF's/LIF's Registered Retirement Income Funds|
RESP'S (REGISTERED EDUCATIONAL SAVING PLAN)
The government is finally giving us some free money with the Canada Education Savings Grant (CESG). How can anyone turn that down?
1. Government Grant - CESG
- The federal government will contribute 20% of the RESP owner’s annual contribution, to a maximum of $500 a year, $7,200 maximum lifetime, per beneficiary.
- Benefit – This will potentially add an extra $7,200 to the RESP and will grow to be worth $36,000 if invested for 18 years at 8% annual growth, compounded monthly. NOT BAD!
2. Foreign Content
- Canadians looking to invest outside of Canada. Can take advantage of the potentially higher returns of foreign markets.
- There are no foreign content restrictions on RESP investments.
- Benefit – This will give you the opportunity to diversify globally.
3. Transferability of RESPs
- If the beneficiary does not attend post-secondary school the parent now has more options than ever before.
- Benefit – Investment returns are not lost like previous RESP programs. However the government grant MUST be repaid. (There are stipulations involving this transfer.)
- The average cost of a four-year university education is currently $40,000.
- By the year 2020, the cost will be approximately $100,000 for four years.
- Government funding is decreasing dramatically, forcing students/families to look at other options.