Canada Education Savings Program (CESP) Helping Parents Save for Their Children’s Post-Secondary Education 1
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Canada Education Savings Program(CESP)
Helping Parents Save for Their Children’s Post-Secondary Education
1
4 Years University Cost
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 $-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
$49,948 $51,996 $54,067 $56,251 $58,523 $60,887 $63,346 $65,905 $67,196 $69,911
$87,823 $91,372 $95,063 $98,903 $102,899 $107,056 $111,382 $115,882 $120,564 $125,415
Living at Home Living AwayThe above costs are from CanLearn webite www.canlearn.ca and assuming a 2% annual increase
Offers Post-Secondary Education Savings Incentives
1. Canada Learning Bond (CLB) 2. Canada Education Savings Grant (CESG)3. Additional CESG
2
RESP
(Registered Education Savings Plan)
RESP Industry In Canada*
$47 Billion in
RESP
5.4 Million Beneficiaries
$9.7 Billion
in Gov’t Grants
*Annual Statistical Revue Government of Canada
What is an RESP?• Education Savings Plan Registered with Canada Revenue Agency • Contributions + Grants Grow Tax Free.
How Does RESP work?• You Contribute Monthly or Annually or One-time Payment Amounts In Your RESP• Free Money (Government Grants) Matches 20% of the Amount You Contribute in your RESP
(up to $7200 per child, a maximum of $500 per year, or $1000 in catch-up cases) • Total Amount (Your Contributions Plus Government Grants) are Invested and Grow Tax Free• Your Kid can go to university in Any Part of the World
RESP can remain open for 36 years.
7
Where are RESP’s Offered?• Specialized Companies for RESPs
• Banks
• Insurance Companies
10
What Sort of Investments and Risks?
7
Savings Account (Very Low Risk)Govt Bonds, and Fixed Income (National Policy 15) (Low to Moderate Risk)Guaranteed Investment Certificates (N15) (Low to Moderate Risk)Mutual Funds/Stocks (Moderate to High Risk)
Make sure you get advice on the most suitable investment category to your situation
National Policy 15 Recommends low to moderate Risk for RESPs Investments
Choosing the Right RESP:
Individual PlansOne beneficiary (child) which can be changed to a sibling at any time. Multiple subscribers possible: Parents, grandparents or even someone not related to the child.Family PlansMultiple beneficiaries possible, can be opened by parents or grandparentsGroup PlansGrouping of children by age. Strict guidelines apply to transferring to other plans and to prescribed timing of enrollment in an approved post-secondary institution
10
Make sure you get advice on the most suitable plan to your situation so as not to burden yourself
Example for Yearly Contributions Until Age 18
• Age: 6 Years• Yearly Contributions: $3000• Annual Rate of Return: 4%*
Your Contribution You Receive$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$36,000 $36,000
$7,200
$16,432
Contribution Gov't Grants Earnings
$59,632
Rate of Return 66%
*Assumption based on low to moderate risk investment strategy (Gov’t Bonds and Guaranteed Investment Certificates) recommended by the Securities laws in Canada for RESP Investments
Example for Monthly Contributions Until Age 18
You Contribute You Receive$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
$50,000
28,800
$28,800
$5,760
$12,517
Contributions Govt Grants Earnings
Rate of Return 63%
$47,077
*Assumption based on low to moderate risk investment strategy (Gov’t Bonds and Guaranteed Investment Certificates) recommended by the Securities laws in Canada for RESP Investments
• Age: 6 Years• Monthly Contributions: $200• Annual Rate of Return: 4%*
Example for Yearly Contributions Until Age 18
• Age: 11 Years• Yearly Contributions: $5000• Annual Rate of Return: 4%*
Your Contribution You Receive$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$35,000 $35,000
$7,000
$10,242
Contribution Gov't Grants Earnings
$52,242
Rate of Return 49%
*Assumption based on low to moderate risk investment strategy (Gov’t Bonds and Guaranteed Investment Certificates) recommended by the Securities laws in Canada for RESP Investments
Example for Monthly Contributions Until Age 18
You Contribute You Receive$0
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
$45,000
28,800
$28,800
$5,760
$7,292
Contributions Govt Grants Earnings
Rate of Return 45%
$41,852
*Assumption based on more conservative view
• Age: 6 Years• Monthly Contributions: $200• Annual Rate of Return: 2.5%*
Example for Yearly Contributions Until Age 18
• Age: 6 Years• Yearly Contributions: $3000• Annual Rate of Return: 2.5%*
Your Contribution You Receive$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$36,000 $36,000
$7,200
$9,615
Contribution Gov't Grants Earnings
$52,815Rate of Return 47%
*Assumption based on a more conservative view
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