RESPs

They Grow Up So Fast

RESP's through Tradex

Registered Education Savings Plans (RESPs)

The average yearly tuition cost for an undergraduate degree in Ontario is estimated to be $6,307 in 2011, a 5 % increase from 2010. With continuous likely increases in the future and without including additional costs for course material, food and lodging, this would suggest that at a minimum, the cost of a 4 year undergraduate degree will reach $27,184 by the 2015 graduation year. This can be a daunting expense for Canadian families.

Not to worry! Tradex can help! Take advantage of generous government grants and our low cost mutual fund options to save for your child’s education!

Starting early has its advantages. Over a 10 year period, an annual $2,500 contribution along with the maximum government grant of $500 entirely invested in a Canadian Equity Mutual fund compounding at 8%, will grow your RESP savings to $43,459.69. This can also be achieved with monthly contributions of about $200.

Key RESP Advantages

• The Government of Canada provides a cash grant of up to $500 per year (20% of the first $2,500 contributed annually) for each child up to the calendar year in which they turn 17, subject to a lifetime grant limit of $7,200 per child. Thus, if you contribute $2,500 a year to a RESP, after the Government grant, the amount actually invested will be $3,000.
• The grant room is cumulative and allows for you to catch up on “unused’’ grant eligible contribution room over time (the maximum grant allowed in any one year is $1,000). Thus, if a child was born a few years ago and does not yet have a RESP, you can still receive the maximum grant amount.
• RESP contributions are not tax deductible by the contributor, but the income and capital gains earned on the entire investment grow tax-deferred. And, when those earnings are eventually withdrawn to pay for educational expenses (including tuition, books, housing, etc.) the money is favorably taxed at the student’s typically low income tax rate.