The RESP is the best way to save for children’s post- secondary education. To get the most out of it, here’s a simple way to build a solid contribution strategy.
There are many ways to make your RESP grow while sticking to your budget. In addition to being accessible to everyone, these three strategies will make it easier to manage your savings:
The main advantage of an RESP? Up to $12,8001 in government grants to finance your child’s post- secondary education! A serious boost that will have a significant impact on your saving strategy. Here’s how it works: you contribute, then governments add at least 30% to your savings.2
In addition, the money is deposited directly into your RESP.
How do you maximize grants? Contribute up to $2,500 or up to $36,000 lifetime per child.
Not to be confused with the lifetime RESP contribution limit, which is $50,000 per child.
En savoir plusMaybe you delayed opening an RESP for your teen, or you were not able to maximize it in the last few years? No problem. By catching up on grants, you can recover your unused RESP contribution room one year at a time.
If your financial situation allows, you can increase your savings rate and contribute up to $5,000 per year. For a Quebec family, this can mean $1,500 in grants.
Depending on your income or family situation, governments could add up to another 60%2 to your contributions. This measure reinforces the financial efforts of low- and middle-income families.
You could receive up to $2,000 with the Canada Learning Bond (CLB), which only requires you to open an RESP. Considering there are no sales charges with Kaleido, it’s in your best interest to get that money back as soon as possible!
When it comes to RESPs, the important thing is to contribute! And making automatic payments is one of the best ways to achieve this. At Kaleido, you can schedule monthly payments with just a few clicks in your Client Space and modify them at any time if your financial situation changes.
The benefits of systematic savings are undeniable!
The more regularly you contribute, the more powerful the effect, since returns will accumulate on your capital, on grants and even on interest already generated.
Not only are payments tailored to fit your family budget, but you can make them without even thinking about it! This also reduces the volatility of your investment.
While post-secondary education seems like a long way off, this is an excellent time to open an RESP. Because when it comes to investing, time is your best ally!!
Investing early in education savings gives you peace of mind for the next 15 to 20 years. Because you can’t put a price on knowing that your child will have the means to reach their goals.
- Jean-Stéphane Parent, Vice-President and Chief of Marketing and Investment at Kaleido
In savings, just as in everyday life, what works for a baby does not necessarily work for a teen. So, you will need to adapt your investment strategy…
Your investment horizon will have a big impact on how you can maximize your grants and whether you need to plan a catch-up to get there. Look at the differences between the following three scenarios, designed to get the maximum grants from the smallest possible monthly payment4.
| Baby 0 year |
Child 5 years |
Teenager 12 years |
|
| Investment horizon | 18 years | 13 years | 6 years |
| Suggested monthly contributions | $170 | $235 | $420 |
| Total contributions | $36,720 | $36,000 | $30,240 |
| Grants obtained (plus catch-up) |
$10,800 ($0) |
$9,648 ($1,152) |
$4,500 ($4,500) |
| Accumulated returns | $13,708 | $9,445 | $3,486 |
| RESP value | $61,228 | $56,905 | $42,726 |
How much will your child need for their education? Few parents can predict what path their child will choose in 5, 10 or 15 years, but knowing what their education could cost by the time they’re ready to make that choice can help shape your strategy.
A turnkey investment strategy that automatically adapts to optimize your investment. The younger your child is, the bolder you can be. The closer they are to post-secondary education, the more we protect your investment. This is the idea behind scalable management of Kaleido’s individual IDEO+ RESPs.
Education savings support your child’s future plans. With grants, tax-sheltered growth and flexibility, the RESP allows families to save without complication.
When your child is ready to take the plunge into post-secondary education, all you have to do is provide proof of enrolment in a qualifying educational program to activate the withdrawal of their Education Assistance Payments (EAP). With our online services or the help of our education savings advisors, making withdrawals from your RESP is a simple and straightforward process.
In addition to your usual annual contribution, you can recover one year of unused RESP contribution room at a time. In concrete terms, if you are eligible, you can contribute up to $5,000 in a single year and receive grants on this amount. This is called grant catch-up.
The lifetime contribution limit of $50,000 applies to the child, regardless of the number of RESPs opened in their name. To avoid exceeding this limit, it is important to coordinate contributions among all subscribers. The same is true for the lifetime limits of $36,000 and $2,500 per year to qualify for grants.
Start by using our RESP calculator to estimate the amount to invest based on your goals. Next, determine a monthly payment that will fit into your family budget. You can always adjust it down the road. Finally, set up your monthly payment directly via your Client Space.
In an RESP, returns will accumulate on your capital, but also on the grants and interest already generated. In other words, the sooner you begin, the greater the impact.