Registered Education Savings Plan- a real gift for your child
Registered Education Savings Plan is a beautiful way to secure your child’s education. It gives you multiple options to put in your investment. The flexibility though is not great, yet, the plan surely assures your child a large sum of money when h needs it for his higher education.
You have following options to make investments into RESP:
You can invest for a single child
If you want to start this investment for one child, you have the option of doing the same.
You can start up Family RESP
This option gives you the benefit of investing for more than one child. But, while you are going for this option make sure, that you name the beneficiaries and the amount you are contributing for each child. Unless, you do this your contributions might be switched to any one of the children. As a result the other one would remain devoid of the benefits. The government needs to track the contributions made for each child, hence nomenclature of contributions is very important. And this is also necessary for getting the tax receipts.
Saving upon the fee
If you open separate accounts for all your children, you might land up paying a huge amount of money as annual fee and the paper work will also get doubled up. So, open a single family account to save paying an extra annual fee and getting caught into multiple paper works.
You can make a single payment investment
The maximum amount you can invest in this plan is $50,000. If you invest the entire amount in one go, at an interest rate of 5% after 17 years, the beneficiary would be getting around $1, 21,000.
You can make opt for regular payment option
Under this option you will have to make a lump sum contribution of $16,500 the first year, and the following 14 years the contribution would be %2,500 every year. In this case the, return at 5% after 17 years would be $119,000.
Understand the eligibility criteria
Your child must be a resident of Canada and the account has to get started before the year in which the child turns out to be 15.
RESP is a great mode to secure your child’s education without putting much pressure on you. Of course the planning has to start on time to receive greater benefits.