(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.
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