With education comes the power to change things, the freedom to choose your destiny, the chance to improve your quality of life. So why not secure your children’s future by contributing to a Registered Education Savings Plan (RESP) from an early age?
The RESP is the ideal means of savings to finance (part of) the post-secondary education of your children. Once enrolled at CEGEP or university, they can use this amount to pay for their tuition and other expenses related to their education.
But behind every investment there is a story. It is with an even more human vision, hence the slogan “Seeing beyond the numbers”, that Laurentian Bank recently added the RESP to its range of investment products, to support parents who want to invest in the future of their children.
In addition, the financial institution has launched three new ESG model portfolios: “environment, society and governance”, which are composed entirely of socially responsible investment funds*.
This means that it is now possible to invest responsibly in the future of your children thanks to the Laurentian Bank.
Save as soon as possible
By saving in a RESP you give them a financial boost to reach their full potential and realize their ambitions. But the question all parents ask themselves: When should I start saving for my children’s education?
The answer is simple: “You have to start as soon as possible to avoid it being too late,” says Pierre-Raphaël Comeau, Expert Advisor, Wealth Management at Gestion Privée – Laurentian Bank.
Once your kids get their Social Insurance Number (SIN), they can even be beneficiaries of a RESP. By starting saving early, you have plenty of time to build the contribution limit of up to $50,000 per child — before capital gains income and grants — without overpaying.
By contributing the annual ceiling of $2,500 from the birth of your child, you will receive the maximum government subsidy, which is at least 30%. For example, the Canada Education Savings Grant (CESG) alone can get you up to $7,200 over the life of the plan…if you start early!
And this, without forgetting the “magic of compound interest,” explains Mr. Come on out. The income from your investments and the subsidies received also provide additional income. “So the sooner we start, the more the investment will do the work for us, and the less effort it will be from a savings perspective,” he adds.
Since RESPs are used to fund your children’s post-secondary education, don’t wait until it’s too late to get started. Ideally before their transition to high school. You can take advantage of the catch-up strategy to “make up” for the missed years.
“Per child it is possible to bet $5,000 per year [2 500 $ en cotisations pour l’année en cours + 2 500 $ pour l’année de rattrapage]† You can also buy back a missed year per child. However, you can only pay off one per year,” the advisor says.
A quick and easy way to contribute to your child’s RESP is to invest your family allowances and join the automatic withdrawal program, which allows you to contribute without thinking about it.
What to remember about the RESP
– It is possible to contribute up to $2,500 per year, with a maximum of $50,000 per child.
– Allows you to generate income on the invested capital, which is tax-free until the moment of withdrawal.
– In addition to your annual contributions, a government grant of at least 30% is offered.
– You can invest responsibly (ESG investments), and thus contribute to a better world for future generations.
– It is possible at any time to make changes to your RESP, individual to family RRSP, contribution amount, etc.
Keep in mind that the Registered Education Savings Plan is not just for parents. Grandparents, guardians, an uncle or aunt can also open a RESP for a child.
Plan now for your children’s future by investing in a RESP. Benefit from personal support and advice to achieve this by making an appointment with a Laurentian Bank adviser.
TM Trademark of Laurentian Bank of Canada.
* Mutual funds are distributed by LBCSF, a subsidiary of Laurentian Bank of Canada (“Laurentian Bank”). Fund Facts contain important information. Please read this document(s) carefully before investing. For more information on the funds you trade, please refer to the Funds Simplified Prospectus. You may obtain the Simplified Prospectus(s) and/or Fund Facts by contacting an LBCSF representative at a Laurentian Bank branch. An investment in an investment fund (fund) may give rise to sales and trailer fees, management fees and other costs. The funds offered by LBCSF are not covered by the Canada Deposit Insurance Corporation, or by any Canadian securities regulator, or by any other government deposit insurance company. In addition, the funds are not guaranteed in whole or in part by Laurentian Bank or any fund company. There is no guarantee that the fund will be able to maintain a fixed net asset value per share or that the full amount of your investment in the fund will be returned to you. Fund values often fluctuate and past performance is not an indication of future performance.