Things You Must Know About Canada’s Registered Education Savings Plans (RESPs)
RESP or Registered Education Savings Plan is a popular child’s educational option available in Canada for families who need support for their kids’ future after high school. Though RESPs in general are known to benefit children, anyone in this country can actually open one with an adult as beneficiary. The one who opens the plan will then be called the “subscriber.”
As soon as your kids enroll in post-secondary education, they automatically become entitled to payments courtesy of their RESP; to be more specific, they will take EAPs or educational assistance payments. EAPs are literally made up of grant money from the government and investment earnings. Once your child begins receiving EAPS, he or she then is called the beneficiary.
So, if you reside in Canada and would like to avail RESP, here are some of the most important things you ought to know about this program; and mind you, there are a lot of things you first must understand before even considering it.
Learning The “Secrets” of Savings
1 – One of the first things you must know about your savings in RESP is that they’ll grow tax free. In simpler terms, it means that as long as your investment earning stay within the plan, they never will be subjected to tax.
How I Achieved Maximum Success with Savings
2 – It also is worthy of mention that if the child is under 17 years old, it means that he or she will be protected by the government by way of putting money into the RESP, which by the way is presented as either bond or grand.
3 – Moreover, you must become aware that since it is your account or plan, you have the freedom to add money to it whenever you want; but mind you, the usual lifetime warranty amount is $50,000. But you should be aware as well that some plans will require you to set and schedule monthly or annual contributions.
4 – It also is interesting to know that contributions aren’t also considered as tax deductible. You however can withdraw them from the plan whenever you want and it will be tax free.
5 – It may be true that you are relatively new and unfamiliar with this type of program, but understand that it’s never really a difficult decision to make because you have so many different investment options available, including bonds and stocks, mutual funds, and GICs.
In the end, you simply must understand and recognize the fact that with the sheer number of available plans out there, it means you can pick something that should be flexible enough for you to weigh on your options and figure out which of them have a good potential of converting your savings investment into success.