(NC)—One of Canada's best-kept secrets for parents wanting to save for their children's future education needs has been around since 1998. That's when the federal government began offering the Canada Education Savings Grant (CESG) as an incentive for parents and relatives to set up RESPs (Registered Education Savings Plans), with their children as beneficiaries.
CESGs will match 20 per cent of your annual RESP contribution – up to an annual maximum of $500 per eligible beneficiary until your child reaches age of 18, or a potential total of $7,200 over the life of the plan.
“Parents in Canada who aren't taking full advantage of these government grants are leaving a good deal of money on the table,” advises David Birkbeck, the head of registered products strategy at RBC. “With post-secondary education costs continuing to rise, it's important to be aware of this additional funding as it can help your plan grow well beyond your own contributions.”
The other “secret weapon” to help grow your plan is the way you choose to invest your RESP funds. As a low- to no-risk investment, you can place your RESP savings into a standard savings account. You can also opt for GICs (Guaranteed Income Certificates), for higher returns than a standard savings account. Or, for the potential to earn a higher rate of return than most GICs over the long term, you could consider mutual funds.