For those who are unfamiliar with the topic, RESPs are arguably the best way to save for your kids’ future education. It’s a program by the Canadian government wherein parents can open a structured savings account for a child’s post-secondary education.
There are good reasons why you should sign up for an heritage education funds RESP account. Here, we list some of the most essential reasons. Read on!
1. Government Support
Basically, RESPs help you access better government monetary support such as Canada Education Savings Grants (CESGs) and Canada Learning Bonds (CLBs), which can put a lot on the table for your educational expenses. On top of those, you can get lucky and receive further provincial grants.
2. RESPs Grow Tax-Free
The money you contribute to the RESP account grows tax-free. As we all know, taxes can eat away on your savings. You can avoid that problem by investing in RESPs.
3. Different Savings Options
There isn’t just one kind of RESP account. In fact, you can choose from these two main types of RESPs, each offering benefits for you and your child.
As the name suggests, these RESPs have one named beneficiary. Other than that, they’re benefits are as follow:
• The beneficiary doesn’t need to be related by blood or adoption to the subscriber.
• There’s no age restriction for the beneficiary.
• You can convert multiple individual plans into a family plan any time.
Quite obviously, this type of plan is for the whole family. You can name more than one beneficiary, making it more suitable for parents with two or more children. Among the benefits are:
• There is less paperwork.
• There are potentially lower fees.
• You can enjoy flexible withdrawals.
4. You Are Not Alone In Saving Up
That’s right. Your friends and family can give you some help when contributing to the heritage RESP account. Your child’s uncle, auntie, godfather, godmother, and even your closest non-relative friend can help you save up funds for your kid’s education.
5. Investment Options
Most RESP accounts offer very flexible investment options. Better hit the books and research about mutual funds, stocks, bonds, and other investment assets. These can help you further save up for the future of your child’s education through capital gains, coupon payments, and dividends.
6. Open for 36 Years
An RESP account can be kept open for 36 years. That’s slightly more than 3-and-a-half decades. So, you got a lot of time to save up especially if your youngster decides he or she doesn’t want to pursue a post-secondary education.
There’s a huge chance your child will change his or her mind about this, so keep it open. Take advantage of the long time span and save more.
7. Higher Inflation and Tuition Fees
A bit of economic lesson here, if you’re not already aware: inflation refers to the pace at which the prices of goods and services increase. It’s a key measure for economic growth. And sometimes inflation grows faster than your paycheck.
Then there’s the hike in tuition fees. Coupled with the speed of inflation, just imagine how much college would cost in the future. Heritage education funds RESPs help you prepare your budget better for that scenario.