RESPs or registered education savings plans are a boon to parents everywhere because the rising cost of education is here to stay.
In fact, it has been projected that in just a couple of years the cost of college education could well over reach $138,000 in the year 2036 and Heritage RESP can help you..
This is a massive jump from what the previous generation is used to, and it would be best to begin early in preparing for your child’s educational needs after secondary school.
Three easy steps will get you signed up for an RESP in Canada:
Step one: Call a financial institution or scholarship plan dealer.
Financial institutions and scholarship plan dealers are the two main sources of legitimate registered education savings plans in Canada.
Under financial institutions, you have investment groups or firms, banks, credit cooperatives, etc. Under scholarship plan dealer, you have companies like Heritage Education Funds of Canada taking the helm.
Whatever your choice may be, just make sure that you ask for the policies when taking out the educational plan and double check everything with the agent you are speaking to before signing everything.
The biggest mistake is signing all the papers while only knowing gist of what you are getting into.
While the government definitely regulates the institutions and companies that offer this type of financial product, private entities still reserve the right to enforce their own policies and not paying enough attention to the fine print can be disastrous.
Step two: Select the plan that is right for you
There are three kinds of educational savings plans: individual, family, and group.
The policies for each type differ from institution to institution, so it would be best to compare the fine print and benefits before making a final institution.
Also remember your role in all of this – you will be the subscriber or the person who is signing up or opening savings plan for the beneficiary, or the person who will be collecting the payments or EAPs (education assistance payments).
After selecting the plan that is right for you, be sure to double check the payment schedule and how much you should pay monthly, or annually.
Take note also that the Canadian government will be shouldering part of the regular contributions to the RESP, but only to a certain extent.
Step three: Ask how to improve the financial outlook of your child during college.
If you think that your savings plan needs to earn more interest, you can ask the officer of the bank or the company offering the education savings plans to explain to you your investment options.
A sales representative will be able to tell you how much you must contribute to your child’s RESP to reach a certain goal by a specific year.
This is important, because if you want those EAPs to provide sufficient value when the time comes, you need to start investing today. Additional contributions will earn you more interest in the future.