Leverage government grants by maximizing your RESPs
November 13, 2012
updated October 10, 2013
Did you know that your RESP is eligible for a bonus from the federal government? It’s called the Canadian Education Savings Grant or CESG.
Each year, the government will top up your annual contribution by 20 per cent, up to a maximum of $500 for each child ($1,000 in CESG if there is unused grant room from a previous year). To maximize your investment and achieve the $500 in additional funding, you would have to contribute $2,500 each year, however if you’re not able to contribute this full amount the government will still provide CESG based on the amount you do contribute.
Depending on your family income, additional grants may also be available for you to take advantage of. If your family income is under $43,561 , you could receive up to $100 extra in grant money on the first $500 you contribute. If your family income is between $43,561 and $87,123, you could receive up to $50 extra in grant money on the first $500 you contribute.
A government program like this can help you achieve significant returns just by opening and funding an RESP. Following is an example* that demonstrates the additional growth that you can achieve, with a minimum contribution of $100 per month over 18 years.
*Assumes monthly contribution of $100/month (no indexation of contribution amount) and an annual growth rate of 4%. This chart is used only to illustrate the effect of compounded growth rate and is not intended to reflect future value of any fund or returns on investments of any kind.
The best approach is to get started as soon as you can, and contribute regularly, not only to maximize your investment over the long term, but to also ensure you meet the special age rules.
For children who are between 15 and 17 years of age, the CESG will only be funded if:
- A minimum of $2,000 has been contributed to an RESP for the child, by the end of the calendar year in which he/she turns 15, or;
- At least $100 has been contributed to an RESP in any four years up to and including the calendar year in which the child turns 15.
The CESG is a great way to help you start saving for your child’s education – let us help you take advantage of it. Talk to a Coach today who can help you find the right balance based on your financial situation.
Win $500 towards your RESP.
Journey to best – it’s up to you now
Libro Financial Group and United Communities Credit Union announced their intent to amalgamate in early June, and since then have been mapping out the plans to create the best financial institution in southwestern Ontario. On November 6, 2013, Libro Class A and B shareholders, and Owner Representatives will have an opportunity to change the future of financial services in southwestern Ontario by casting their votes at a Special General Meeting. Read more.
Blueprint for self-employed success
Over half of the Canadian labour force is either self-employed or working for a small business with less than 50 employees. Every year, thousands of new small businesses are created – and thousands of those go bankrupt within the first year. Read more to learn how you can ensure success.