It is the dream of every parent to see their children excel in their studies and become great people in the society as a result. Contrary to what many people think, saving for your child’s education does not have to be a complicated process. However, education is increasingly becoming expensive and setting up an RESP for your child is the best option. An RESP is a registered education savings plan for your child’s post secondary education. The contributions can go up-to $50,000 per beneficiary and the money is tax-free during the plan. Low income earners also get additional top-ups from the government in form of grants. Below are the steps to set up and RESP for your child.
1. Get a social insurance number for the beneficiary
A social insurance number is imperative in setting up a child’s RESP as well as registering for the government grants. This social insurance number will also come in handy later in life when applying for the first job as well as credit cards. Getting a social insurance number is an easy task that is offered by the state.
2. Learn about the options
There are a number of options that you need to consider before diving in to the Heritage RESP plan. First, there are three types of RESPS namely individual, family and group. An individual plan is normally used to pay for one child’s post-secondary education costs. This can be done using investment advisers at the bank, mutual funds sales representative of an independent financial adviser. Before committing, ensure you’re aware of the minimum contributions well in advance. A family plan is important as it covers more children in the same family while at the same time saving fees.
3. Assess The Advantages and Disadvantages of Each Option
Each of these types has its own pros and cons and one has to be very wary of this. The family and individual plans work best for those subscribers who want to be in charge of their investments. One can decide on the investment options available. One can also decide on the amount to contribute and when to make each deposit. During the early stages one can invest the RESP in stocks that have a higher growth potential. In group plans on the other hand, one has to contribute a particular amount per month and for a number of years. In other words, there is a prior set schedule that can be inconveniencing to some people. It is therefore wise to research more and consult before choosing the preferred Heritage RESP plan.
4. Decide on the amount and schedule
In order to receive the complete grant, one needs to invest a minimum of $2500 annually and per child. However, one can maximize out every year if you have your budget allows. Though there are no contribution deadlines, depositing at least annually helps one stay on track and get the best out of the plan.