What are the best options for an RESP for my 2 year old kid?
What are the disadvantages of an RESP?
Disadvantages of an RESP
The biggest disadvantage of an RESP is that any earnings that are withdrawn but not used for post-secondary education incur a twenty percent penalty, and income taxes must be paid on the money.
What is the best RESP in Canada?
Best RESP Providers in Canada
- Wealthsimple RESP. Wealthsimple is Canada’s top robo-advisor with over $10 billion in assets under management. …
- Questwealth RESP. Questrade’s managed investment services, Queswealth Portfolios offer RESP plans. …
- Justwealth RESP.
How much should I save for my child’s education in Canada?
For the 2021/2022 academic year, students in full-time undergraduate programs will pay an average of $6,693 in tuition fees, up 1.7% from the year before. For graduate programs, the cost rises to $7,742 a year.
How long can you contribute to an RESP in Canada?
31 years
Period that an RESP can stay open
You can make contributions into an RESP until 31 years after you first opened it. After that time, however, you can transfer savings from other RESPs into a single plan.
Why is RESP not good?
Unlike an RRSP, there is no deduction.” The drawback with an RESP comes if your kid decides not to attend college or university, which means the government will get back its share, including any investment made off that portion. Of course, you get to keep your own funds and any money made of those.
Whats better TFSA or RESP?
With a TFSA, you have the flexibility to withdraw and then re-contribute that amount again the following year. With an RESP, withdrawn contributions are not added back to your contribution room and cannot be re-contributed. If you cannot make an RESP contribution in any given year, you can carry over unused Basic CESG.
What is best investment for RESP?
Everything from cash and mutual funds to GICs, stocks, bonds and ETFs can be used to build up your RESP. As you approach the date of decumulation, you may want to gradually shift to a more conservative strategy, particularly if your initial strategy was strongly growth oriented.
Which RESP is the best?
Best Robo-Advisor RESP Accounts in Canada
- Wealthsimple RESP. Wealthsimple is Canada’s largest and most popular robo-advisor. …
- Justwealth RESP. Justwealth is a Canadian robo-advisor that offers Education Target Date Portfolios. …
- Questrade RESP. …
- CI Direct Investing RESP.
How do I choose a good RESP?
Read all the documents. Pay attention to the details (fees, penalties, commissions and educational assistance payments). If you don’t understand something, don’t sign, and ask the RESP promoter to explain. Take your time and compare the advantages and risks of the different types of RESPs (family, individual or group).
How do I maximize my RESP contributions?
How much do you contribute in order to maximize the RESP grant? In summary, in order to maximize the RESP grant limit, you will need to contribute the maximum each year, which is $2500 per year, and then $500 will be deposited into your RESP account right away via the RESP grant.
Are RESPs worth it?
Parents believe that, on average, their RESP will be worth almost $28,500 when their children need it, a recent RBC survey revealed. But, as most parents start RESPs when their child is 2 years old, their RESP will typically be worth $22,500 by the time their child is 17 — a shortfall of $8,000.
Can I use my RESP to buy a house?
The money can be used to start a business, buy a house, used for travel after school or for education. Quite frankly, it can be used for anything.
How much should I put in my RESP per month?
Starting an RESP account is ideal and contributing about $2,500 per year per child—or $208.33 per month—would be optimal said financial advisor Derek Moran. “The sooner they start, the easier it is to accumulate a reasonable amount,” he said. “With accumulation of wealth, time is always a significant factor.”
When should you begin to invest in an RESP?
An RESP is the best way to save for your child’s post-secondary education, and ideally, you should start one when your child is still a baby, and contribute $2,500 per year.
Can RESP be used for a car?
Education-related expenses
You don’t have to specify how the money will be used or submit receipts (but keep them in case there are questions). So if your child needs a car to get to classes, you can use RESP money to pay for it, along with insurance, gas, parking and maintenance.
Do you report RESP on taxes?
An RESP is considered an educational assistance plan and the interest you receive from it must be shown on your tax return as income earned. The carrier of the RESP sends you a T4A that shows the amount you received. You are entitled to receive RESP payments for up to six months after you leave school.
Can you lose money in RESP?
As a result, parents lose a chunk of their money right out of the gate. What’s more, the rules on contributions and withdrawals are complex and restrictive, and there are stiff penalties for leaving the plan early. In extreme cases, parents have lost all of their RESP savings.
How can I withdraw my RESP without paying tax?
The subscriber has already paid taxes on the PSE. This money can be withdrawn without any taxes owing. No taxes are paid on EAP money until it is taken out of the RESP account. When it is withdrawn, the EAP is looked at as taxable income for the student.
How much is RESP per year?
RESP Contribution Rules & Limits
There is no annual RESP contribution limit. However, to maximize your potential annual CESG grant of $500, it’s recommended that you contribute up to $2,500 to your RESP per beneficiary per year. Keep in mind that the lifetime contribution limit for any one beneficiary is $50,000.
What age do RESP grants stop?
You can contribute to an RESP for up to 31 years, and the plan can remain open for a maximum of 35 years. Under the CESG, the government matches 20% on the first $2,500 contributed annually to an RESP, to a maximum of $500 per beneficiary per year. The lifetime maximum per beneficiary is $7,200, up to age 18.