Every parent has to start thinking about their higher education from their toddler stage itself. So that they can save a huge amount of money for their university education. It this fast-moving world as a parent, you have to be extra cautious while choosing the plans for saving your hard earned money for your child. But you have to analyze various facts, before choosing a certain scheme. How much you can save? What is the proper way to invest your money?
Therefore, to ease your work here, we have analyzed a scheme which will be fruitful for you in the later stage.
What is an RESP
Let’s discuss RESP. It is truly a smart move to go for a Registered Education Saving Plan known as RESP for your budding child. This simple and useful method of saving you as well as your friends and relatives also can contribute their part in saving money for your child’s education. So you don’t have to think much in case you are running out of money at a certain stage. They can contribute money as birthday gifts.
A Registered Education Saving Plan brought to you by the Federal Government in the year 1972. And it included a special grant from the Government in the year 1998. The special grant plays a vital role in your child’s higher education. The initiation process of this RESP account is quite simple. The beneficiary has to be a Canadian citizen with a valid SIN number. In this scheme, your money multiplies and that is also tax-free. On the other hand, you also get a generous amount from the Government.
Different types of RESP
Mainly there are three types of RESPs. They are Individual plans, Family plans, and group plans. In this individual RESP plan, you can contribute your money and save for the higher-secondary education for one beneficiary only. And this is known as self-directed accounts. Whereas with a family RESP plan you can add more than one beneficiary at a time. So it is quite good to opt for a family RESP scheme you have multiple kids in your home. In terms of the RESP, a family plan is the best. In the Group RESPs which is also known as scholarship trusts, you have to contribute a higher amount of fees and it comes with pre-set contributions. So it is not a good choice in terms of child education saving plan.
How to initiate an RESP
To initiate an RESP account any parents, grandparents can opt for the scheme. They can open an RESP account for their child or any other family member, but the maximum age limit is 21. The maximum amount for a Registered Education Saving Plan is $50,000. After the completion of high school, your child is eligible to get the money to support his educational cost.
You can go for the RESPs through financial institutions and banks. All the RESPs have their own set of rules and regulations. So it is quite good to know the details of all that after good research, and then only open the account for the benefit of your child.