Education is important, so shouldn’t saving for it be too? Read on to find out why an RESP is worth all the hype!
In today’s competitive world, education has gained a lot of importance. The chagrin to get into the top schools is omnipresent and so are the foot-long bills that come with them.
So, how does one save up and guarantee a good education for their child? Well, the RESP, an initiative by the Canadian Government can help you do just that while adding in a lot of benefits!
What is an RESP?
A Registered Educations Savings Plan is a government enabled system that allows you and other family members to make contributions to your child’s education in a systematic manner. This also allows you to gain access to a number of grants that can boost your savings.
Why is it important?
RESPs are considered a great choice for saving for the following reasons:
An RESP can help you make use of the CESG and Canadian Learning Bonds based on your income. These accumulate to a large sum over the years and can be super helpful in funding your children’s education comfortably.
2. Tax-Free Savings
Over the years, your contributions made to the RESP can be withdrawn tax-free. The grants received from the government are taxable once withdrawn but at very low rates, giving you more profit than loss!
3. It can be easily transferred
The greatest feature of an RESP is its flexibility. Not all plans are created this way, but when you choose one which is flexible, even if your child does not make use of the amount, it never goes to waste. It can be transferred easily to your other offspring or can even be converted to an RRSP to help finance your retirement comfortably.
The dependence on a good education to get placed in the right organizations has increased significantly. Most parents, without a plan like RESP would not be able to work towards saving the right amount, considering the increased costs and fees involved.
The RESP provides parents with an investment plan that only grows exponentially. The government aids that come with it, work towards providing better opportunities to children even from very low-income families. The many plans can be tailored to work for the betterment of your child’s future and provide them with a comfortable cushion.