Back to school… and back to RESPs
It’s back-to-school season! That means it’s back to books, tests and worksheets. It’s also back to thinking about one of my favourite savings tools—the RESP!
Wait… are you not also excited about the amazing RESP (Registered Education Savings Plan)? But how can you not be? It’s surprisingly generous, uniquely Canadian, and way more flexible than you may have realized! What’s not to love?
Ah, okay… you’re a little overwhelmed with all the info (and all the misinformation too). It’s tough to figure out what’s what. Well, I’m here to help with that.
Let’s do this the fun way
To help you learn about RESPs (and test those of you who are old pros) I decided to do something fun and different here at Eat Sleep Breathe FI… I created an interactive RESP quiz!
Note: I created this quiz for free on tryinteract.com (that’s why you see their logo in the corner of the quiz). Be assured that the quiz is completely anonymous—I’ve opted out of all the info-collection features.
Give it your best shot!
Give the quiz a spin and let me know how you did:
- 20 correct answers: PhD
- 18–19 correct answers: Master’s
- 15–17 correct answers: Bachelor’s
- 11–14 correct answers: High school
- 0–10 correct answers: Elementary school
Are you at the PhD level with your RESP knowledge, or do you have some studying to do? I’d love to know how RESP-savvy my readers are—share your score in the comments!
More RESP resources
For those who need to brush up on their RESP knowledge, I’ve collected a list of helpful resources below. Have a listen/read, then come back to retake the quiz. (Maybe you’ll earn that coveted RESP PhD the next time around!)
- What’s an RESP & How it Works from Wealthsimple
- RESP Investing From Newborn to High School from Money in Your Tea
- The Mystery of RESP Withdrawals from Money in Your Tea
- RESPs in Canada—All Your Questions Answered from Handful of Thoughts
- Registered Education Savings Plans from Muhs Wealth Partners (this is very comprehensive!)
- Registered Education Savings Plans (RESPs) from Canada Revenue Agency
- List of designated educational institutions from Canada Revenue Agency
- British Columbia Training & Education Savings Grant Information from Government of BC
Some extra incentives
In case you need extra convincing to open an RESP, here are two incentives that might help:
For BC residents
Not all investment services offer the BCTESG (BC Training and Education Savings Grant) but Wealthsimple does! This is great news—Wealthsimple is (in my opinion) the best low-cost option for investing your child’s BCTESG.
In addition, there’s no contribution required to get the BCTESG. That means with the Wealthsimple $50 bonus, you’ll receive up to $1,250 in free money to invest for your child’s future!
- The Government of Canada contributes $500 of CLB in the first year, then $100 each year after (up to and including the 15th year).
- This could potentially add up to $2,000 in free RESP grants from the government!
- Remember: no RESP contributions are needed to receive the Canada Learning Bond.
- Finally, any family that qualifies for the CLB will have their Wealthsimple RESP managed free!
- Based on a conservative return of 5%, with no extra contributions, a CLB-only RESP could grow to $3,700 over 18 years!
- At a 7% return, the RESP could more than double to $4,768!
That’s $3,700 (or more) from free money!
I think this is amazing. For a little bit of time filling out forms, a family could grow one child’s RESP fund to $3,700 (or more)—all from free grant money, being managed for free by Wealthsimple!
Even if your family doesn’t qualify for the CLB, I hope you’ll share this offer with others who might. You could help a child access much-needed money to fund their post-secondary pursuits.
You don’t need a PhD to realize that RESPs are an incredible way to save for your child’s future. You’ll receive free grant money, tax-free investment growth, and low or no-tax withdrawals. It’s not hard to see the appeal of RESPs!
Even if your child doesn’t use (or use up) their RESP, there are flexible options to transfer or withdraw the money—often tax-free. There’s no reason to delay… open your RESP and start saving for your child’s education today!
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