Back to school sees strong push for RESPs

Toddler on mother's feet

It makes sense for parents to start thinking about RESPs during back-to-school season. And there’s no shortage of financial institutions delivering statistical reasons why parents should be investing in an RESP. Yes, including CST.

Essentially, all of the statistics are pointing to two things: the cost of a post-secondary education is rising, and students are taking on more debt. Take a look at personal finance writer Melissa Leong’s article in the National Post last week.

But a lot of new parents with very young children are telling us they don’t want to see their kids struggle when they get older. Lydia Cossette is one of them. “I personally wanted a post-secondary education and went into debt to do it. I also grew up with very little direction or sense of financial responsibility and struggled when I lived on my own and sometimes still do. I don’t want the same struggles for my three boys.” Lydia has invested in a Registered Education Savings Plan to ensure that doesn’t happen.

With all of this information coming at parents many of them will be wondering if an RESP makes sense for their family and if so, which one is the right one?

Here’s the #1 reason an RESP is the best education savings approach: free money from the government! If you choose to invest in a savings vehicle such as a TFSA, you cannot apply for any of the grants available from the federal or provincial governments. (Some provinces, such as Ontario do not offer a separate grant.) Find more info on government grants.

It’s important to note that not every RESP is created equal, and your investment style plays a factor in which RESP may be better suited for you and your family. Traditionally, there are two types of RESPs: a group plan and an individual plan/family plan. Between these two types of plans differences exist, depending on which company or financial institution you choose to invest with. Some companies - including CST - offer both types of plans and give you the option to move from one type of plan to another to provide your family with greater flexibility if the financial circumstances in your family change. That’s why it’s important for parents to do their homework; speak with each of the companies you are considering, ask them questions and weigh the options.

Beware, there’s lots of advice out there, and some of it is incorrect because of a tendency to oversimplify things and paint RESPs with one broad brush. It doesn’t take an economics degree to understand RESPs but it does take a bit of research to understand the best option for your family. The end result should be the right education savings solution for your family.

Back to school sees strong push for RESPs | CST Blog | C.S.T. Consultants Inc.


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