Here's when to start saving for your kids' education

Here's when to start saving for your kids' education



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Here's when to start ;saving for your children's education

With education comes the power to change things, the freedom to choose one's destiny, the chance to improve one's quality of life. So why not secure your children's future by contributing to a Registered Education Savings Plan (RESP) from an early age?

The RESP is the ideal vehicle for saving in order to finance part or all of your children's post-secondary education. Once enrolled in CEGEP or university, they will be able to take advantage of this amount to pay their tuition fees and other expenses related to their education.

But behind every investment, there is a story. It is therefore with an even more human vision, hence its slogan “Seeing beyond the numbers”, that Laurentian Bank recently added the RESP to its investment product offering, to support parents who wish invest in the future of their children.

In addition, the financial institution has launched three new ESG model portfolios: “environment, society and governance”, which are entirely composed of socially responsible mutual funds *.

This means that it is now possible to invest responsibly in the future of your children thanks to the Laurentian Bank.

Save as early as possible&nbsp ; 

By saving in an RESP, you are giving them a financial boost to reach their full potential and live up to their ambitions. But, the question that all parents ask themselves: when should I start saving for my children's education?

The answer is simple: “You have to start as soon as possible to avoid it being too late,” says Pierre-Raphaël Comeau, Expert Advisor, Wealth Management at Gestion Privée – Laurentian Bank.

In fact, as soon as your children get their Social Insurance Number (SIN), they can be beneficiaries of an RESP. By starting to save early, you have plenty of time to accumulate the contribution limit of up to $50,000 per child – before income on invested capital and grants – without having to pay too much deprive yourself.

It is by contributing the annual ceiling of $2,500 from the birth of your child that you will obtain the maximum government subsidies, ie at least 30%. For example, the Canada Education Savings Grant (CESG) alone can earn you up to $7,200 over the life of the plan…if you get started early!

And this, without forgetting “the magic of compound interest”, explains Mr. Comeau. The income from your investments and the grants received will also generate additional income. “So the earlier we start, the more investments will do the work for us, and the less effort will be from a savings perspective,” he adds.

Since RESPs are used to fund your children's post-secondary education, don't wait until it's too late to start. Ideally before their transition to high school. This will allow you to take advantage of the catch-up strategy to “redeem” the missed years.

“Per child, it is possible to put in $5,000 per year [$2,500 in contributions for the current year + $2,500 for the catch-up year]. You can also buy back a year you missed per child. However, you can only redeem one per year,” says the advisor. 

A quick and easy way to contribute to your child's RESP is to invest your family allowances and subscribe to the direct debit program which allows you to contribute without thinking about it.

What to remember about the RESP  

– It is possible to contribute up to $2,500 per year, for a maximum of $50,000 per child.

– It generates income on the capital invested, which is tax-free until the time of withdrawal.

– Government grants of at least 30% are available to supplement your annual contributions.

– You can invest responsibly (ESG investments), and thus contribute to bequeathing a better world to future generations.

– It is possible to make changes at any time to your RESP, individual RRSP at family, amount of contributions, etc.

Note that the registered education savings plan is not just for parents. Grandparents, guardians, an uncle or aunt can also open an RESP for a child.

Plan for your children's future now by investing in an RESP. To achieve this, take advantage of personalized support and advice by making an appointment with an advisor from Laurentian Bank.

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* Mutual funds are distributed by LBCSF, a subsidiary of Laurentian Bank of Canada (“Laurentian Bank”). Fund Facts contain important information. Please read this document(s) carefully before investing. For more information on the funds you trade, you can consult the simplified prospectus of the funds. You can obtain the simplified prospectus(es) and/or fund facts by contacting a LBCSF representative at a Laurentian Bank branch. An investment in a mutual fund (fund) may give rise to sales and trailer fees, management fees and other expenses. The funds offered by LBCSF are not covered by the Canada Deposit Insurance Corporation, nor by any Canadian securities regulator, nor by any other government deposit insurer. Furthermore, the funds are not guaranteed, in whole or in part, by Laurentian Bank or any fund company. There is no assurance that the fund will be able to maintain a fixed net asset value per unit or that the full amount of your investment in the fund will be returned to you. Fund values ​​fluctuate often, and past performance is not indicative of future performance.

Here's when to start saving for your child's education

At Laurentian Bank, we see more than numbers. We help families, businesses and communities thrive by providing personalized financial services and advice.