09/02/2026
September means back to school, and it's pretty surprising how many parents do not take advantage of RESPs.
Registered Education Savings Plans (RESPs) are savings accounts registered with the government to help you save for your child's post secondary education. They offer tax-free investment growth, and significant government grants.
How much? How about 20% each year on up to $2500 of contributions (aka $500).
Basically, a free 20% rate of return before investment returns. Let's do some math here.
If you invest $2500 from the year your child is born until they turn 18, and earn an average annual rate of return of 7%, the account will be worth ~$109,000.
The best part? Your total contributions would only be $45,000 over that 18 year period. The vast majority of the investment comes from returns and government grants. Seems like a heck of a deal to me.
"But what if my child doesn't go to school?"
This is a common question and a reason many people don't open RESPs. Overall, it's a pretty misguided argument.
First of all, do you really want to give up thousands of dollars of grants and returns "in case" your child doesn't go to school? Betting against your kid seems... odd.
Second, you do not lose this money if your child decides not to! In this case you would get your $45,000 of contributions back tax-free, and give the $7200 in grants that you received (the lifetime maximum) back to the government. If you have a RRSP, you could transfer the majority of your investment returns into it tax-free, and pay a small amount of tax on the rest.
No matter how you cut it, RESPs are a good deal.
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