Registered Education Savings Plan

Children are our future, providing them with the necessary education is very important for their personal success. Education plays a huge roll in an individual’s success in life financially but it also costs a fortune for those paying for the education. In the past 10 years, tuition have skyrocketed in price and with every year the costs for college and universities seem to get higher and higher. We are fortunate to have many resources to help provide the best possible education for our children without having to pay an arm and a leg. One of these resources is RESP (Registered Education Savings Plan). RESP is an education savings plan for your child to help pay for college and university tuition, the government will contribute 20% of what your monthly contribution is. A monthly installment up until the qualified age, (usually when the child turns 18) for post-secondary education provides parents with the flexibility needed for their children's education and ensuring financial support for tuition. Most RESP, financial investment companies and financial institutions provide a certain percentages of interest on the principal paid throughout the year which is what helps pay for the tuition and the principal is returned to the parents. Principal is the accumulated money given to the RESP over the years. Each company charges a managing fee, which comes out of the payments made, until the fees are covered. This means the monthly installments aren’t going towards the principal and gaining interest until all managing fees are paid, each year. Also, when selecting an RESP company, you can’t base your selection on their past history as the return on investment will not be the same. In Canada, the government is giving money away for parents that qualify for extra grant money. For eligible parents, you get an additional 20% on top of what the government is contributing to ensure you have enough money saved for your child’s future.

In my case, I decided to go with a financial investment company, Edward Jones. Another education fund company, Heritage approached me making me believe I wasn’t getting all the eligible government grants. So I switched companies, to only realise after I was locked in that I didn’t have any flexibility with Serena’s education fund; it is locked in for the next 18 years and that I was getting all eligible grants with the other company. Make sure to do your research, and don’t just get one opinion, get many. Choose the company that you feel comfortable with, and don’t let them intimidate you. It is your child, and their education savings is a priority.
If your family and friends wants to get your child a present, advise them money would be best and tell them why. You can have more than one RESP for your child. You can always get your child toys, and clothing, but their educational future can be costly as tuition fees keep rising.

Check out my fellow blogger, if you have an interest in where the tuition is today http://risingtuitionfees.blogspot.ca