Saving For Post-Secondary Education

The cost of post-secondary education is already expensive and is expected to rise dramatically over the next 18 years. Right now, a student living at home pays an average of $6,200 per school year for tuition. That's expected to reach $37,000 a year in less than two decades. That's why it's smart to start putting money aside now for your children's post-secondary education. With a little planning, you can grow your money faster, benefit from government grants and programs and save on taxes, too. 

Registered Education Savings Plans (RESPs)

Registered Education Savings Plans (RESPs) are set up through the Canadian government to help families save for their children's educations by putting money away each year. While RESPs are not tax deductible like RRSPs, they do offer some tax benefits. Interest earned on an RESP is tax-free, and when your child starts using the money for school, only the accumulated interest is taxable as income. And here's something neat; anyone can contribute to an RESP, including grandparents, relatives and family friends. Don’t know what to give for that next birthday? A contribution to a child's RESP is icing on the cake.

Canada Education Savings Grant (CESG)

The Canada Education Savings Grant (CESG) is the single biggest reason you should invest in an RESP. When you purchase an RESP, the federal government will add a 20% bonus of up to $500 every year. That could mean up to $7,200 in grants per child! The earlier you start putting money toward a child's RESP, the more he or she will benefit from this annual grant and tax-free interest. And if your child decides not to attend university or college, there are other ways to put that money to use.

GICs (Term Deposits)

This type of investment guarantees you a set return on your money over a fixed period of time, which can be helpful when you’re saving money with a specific date that you'll need it. Short-term deposits usually require a higher investment than long-term deposits and often have a slightly lower rate of return. GICs pay out interest monthly on any term longer than 90 days.

Mutual Funds*

A Mutual Fund is a portfolio of stocks, bonds and other funds that's managed by a professional money manager on behalf of a group of investors. This type of investment is a bit more complicated than a term deposit. You could potentially make more money but a return is never guaranteed. There's an element of risk, even with a mutual fund that invests in guaranteed government bonds. Know that there are usually fees involved in purchasing or selling funds, and often management fees as well. Just do your research before you invest and if in doubt, reach out to a Credential Asset Management Inc. or Credential Securities advisor at ACU.

*Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc.


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