Education has become a keystone element in the determination of a person’s position in any industry. Whether you are working in the food industry or in retail, educational attainment can spell the difference between an adequate life and a not-so-adequate life.
Obviously parents need to assure that their kids will be able to go through college with the minimum of difficulty, even if we know that the economy this year has been anything but great. Nonetheless, Heritage Education Funds & registered educational savings plans can help you put your child through college or university, regardless of the economy.
An RESP is an investment that pays dividends after a period of contribution of the primary subscriber, or the person who opened the savings plan for another person (like your child). There are two main options for opening a savings plan for the future education of your child.
Opening an Heritage RESP
The first option are financial institutions that are duly recognized by the government. These institutions include but are not limited to banks, companies that offer mutual funds options, trust companies, and the like. Some investment firms with a good reputation and long history of compliance with good practices can also be approached for educational plans.
There are two main types of RESPs: individual plans and family plans. Family plans are obvious designed for families with more than one child.
If you have a small family, ask about such a plan to ensure that all your children are covered. There is no age limit (not really) for educational plans, but the best conditions are met when the person who will be receiving payments from an RESP is below the age of seventeen. The reason for this is that students do not have income and therefore, payments from educational plans are not taxed.
The second option for obtaining an RESP are scholarship plan companies, like Manulife or Sun Life of Canada. These companies are usually dedicated to a variety of insurance savings plans. The largest and most stable ones offer three kinds of RESPs: individual RESPs, family RESPs, and group RESPs.
In order to receive an adequate sum of payments during your child’s college years, you have to make the right amount of contributions.
The maximum that you can contribute to a child’s RESP is $50,000, but don’t worry, the minimum contributions for viable payouts during your child’s college years is only a portion of this maximum sum.
It is important to start thinking of your child’s education today because the cost of education has increased so much in Canada since the nineties.
A quick look at the average cost of matriculation in Canada shows that in just ten years, education per semester in Canada has gotten more expensive: from $2,333 in 1995, the cost rose to a staggering $6,191 in 2015.
Now, when you sign up for an educational plan make sure that you read the policies carefully and you commit to these policies. If any policy by the financial institution is disagreeable, it is important that you cancel the savings plan within sixty days of signing up so you will not be penalized.