Invest in your children’s future

You work hard to provide for your family and to make sure your children have every opportunity to climb the ladder of success. A post-secondary education is one of the best ways for them to reach their potential. In fact, a study by the Association of Universities and Colleges of Canada showed that 70 per cent of all new jobs in Canada require post-secondary education.

“The study also showed that on average, university graduates earn $1.3 million more over their lifetimes than workers with only a high school diploma,” says Peter Lewis, a vice-president with the Canadian Scholarship Trust Foundation (CST). “With benefits like these, the value of a university education is clear. But given how expensive university can be, it’s so important to start saving for your children’s education as early as possible.”

Simply opening a Registered Education Savings Plan (RESP) account can be a valuable early step. If your family receives the National Child Benefit Supplement, you are eligible for the Canada Learning Bond program. The government will deposit $500 into your child’s RESP when you open the account, and adds $100 every year they are eligible until your child is 15 years old.

The government also provides a Canada Education Savings Grant, which matches 20% of the first $2,500 of contributions in RESPs each year. Families with average or lower incomes receive 30 – 40% on the first $500 contributed annually, so even small amounts add up in a hurry. The challenge, if your budget is limited, is in finding the right options to make the most of your savings.

“If your budget is limited, then group plans are a good choice,” says Lewis. “In group plans, the investments of many people are pooled together. This gives the fund manager more leverage to grow your investment than an individual would have on their own.”

When weighing your options for RESPs, the first thing to do is to speak with a knowledgeable professional. In choosing the right RESP provider to manage your money, consider how comfortable you are risking the money you invest. Some providers aim for higher returns but in bad times lose money, while others emphasize consistent, steady growth.

It can also be helpful to look for additional benefits the provider might offer. CST, for example, distributes $75,000 in graduate scholarships to members of their plans every year. It’s also important to consider the size of the organization, and their history of delivering returns for their clients.

Photo: © iofoto