Education Planning Centre

With post-secondary education growing increasingly expensive, you need to plan ahead and make smart decisions today.

Education Planning

If you have children, grandchildren or know of another young person you would like to help, this section will guide you in investing for the education they need.

Education Planning Tips

  • Open a tax-advantaged account
  • Earn tax-sheltered growth
  • Take advantage of grant deposits
  • Apply for a Canada Learning Bond

Get Started

Get started by using our RESP Calculator to prepare an Educational Needs Analysis to estimate the future cost of your child’s post-secondary schooling, based on today’s costs adjusted for interest and inflation.

RESP Calculator

RESP Savings Calculator

Step 1: your child(ren)'s education details

The future cost of your child(ren)'s education depends on their current age, how long they will be in school, where and what they plan to study and whether they choose to live at home or away at school. Enter these details below, and see how different scenarios change estimated costs.

Use left and right arrows to navigate between tabs.

Estimated inflation

Inflation is the rise in general cost of goods and services in an economy over time, and affects the cost of living, such as room and board. Tuition costs in Canada have typically risen faster than inflation over time. Enter the average increase you expect for each of these costs each year.

info Enter the rate you expect tuition cost to increase each year, on average, from now until your child finishes school. Over the last 10 years, tuition has increased at an average rate of 4.5% per year.

Enter the rate you expect room and board costs to increase each year, on average, from now until your child finishes school. Over the last 10 years, room and board costs have kept pace with inflation, increasing at approximately 2% per year.

Step 2: your savings plan

The future value of your RESP depends on your current savings, how much you plan to contribute each year, any government grants and bonds, and the growth rate of your savings.

Choose the range of your total family income after tax. This information is used to calculate your eligibility for additional Canada Education Savings Grants. Learn about government grants.

Individuals who have applied and met the requirements for the Canada Learning Bond (CLB) receive an initial $500 grant and annual $100 grants going forward for each child born after 2004. Select “Yes” if you have applied for and received the initial CLB grant. Select “No” otherwise. Learn more about the CLB here.

Enter the total current value of all RESP accounts for all children listed above. This value includes your contributions and any grants you’ve received, and any earnings or losses. Depending on your past rate of return, this amount may be more than or less than the total contributions you’ve made to date.

Enter the average rate you expect your savings to grow by each year, before inflation and taxes.

Enter the total value of all previous contributions you’ve made to your RESP for all children, excluding any government grants. The lifetime maximum contribution amount is $50,000 per child.

Enter the total amount you plan to contribute to all your children’s RESPs on an annual basis. The lifetime maximum contribution amount per child is $50,000.

Any results or calculations displayed on this site are made available for information purposes only, and do not constitute financial or legal advice. By using this calculator, you agree to our Website and Social Media Terms of Use and Privacy Policy.

Assumptions

  1. These calculations assume the use of an individual or family (in the case of multiple beneficiaries) RESP. You can transfer money between individual RESPs for siblings without any tax penalties. And, you do not have to repay any Canada Education Savings Grants (CESGs). Learn more about different types of RESPs.
  2. The age the child attends school is equivalent to the year in which they turn the age entered in this field.
  3. Individuals who have applied and met the requirements for the Canada Learning Bond (CLB) receive an initial $500 grant and annual $100 grants going forward for each child born after 2004. If you check the box to indicate that you have been approved for the CLB and you are within the income requirements, the calculations assume that the initial $500 has already been paid, and $100 will be added annually going forward to a maximum of $2,000 or until the child turns 15. If you leave the box unchecked to indicate that you have not yet been approved, and you are within the income requirements, both the initial $500 and the subsequent $100 grants will be added. If your household income is not within the income requirements, the CLB will not be applied.
  4. Cost data in this calculator was adapted from Statistics Canada Survey of Tuition and Living Accommodation Costs for Full-time Students at Canadian Degree-granting Institutions (TLAC), 2020 - 2021. This does not constitute an endorsement by Statistics Canada of this product. The survey was administered from May to July 2020 and the data cover the 2020 - 2021 academic year. Data are provided for the 113 institutions that are representing the frame of survey. All fees are reported in current dollars and do not take into account student financial assistance or any tax credits that may apply.
  5. Where an institution reported a combined figure for a room and meal plan package, the data have been displayed in a single field.

Here’s how we can help

Next, we will help you determine the best investment products to help you reach your education savings goals.

Additional Information

What is a Registered Educational Savings Plan (RESP)

What Is an RESP?

A Registered Education Savings Plan (RESP) is a tax-sheltered savings account specifically designed to help you save for your child’s higher education.

With tuition fees and the cost of living rising every year, it makes sense to start saving as soon as possible and build an RESP nest egg over time. Though most RESPs are opened for children, you can also open an account for yourself or another adult.

How it works

As the subscriber, you can contribute up to $50,000 per child to an RESP over the lifetime of the plan. While contributions to an RESP are not tax deductible, savings within the plan grow tax-free until withdrawn for education purposes by the beneficiary. The savings are then taxed in the beneficiary’s hands.

The good news here is that, if your child is in the lowest tax bracket at the time of withdrawal, no taxes will need to be paid.

CESG Program

A key bonus associated with opening an RESP is the Canada Education Savings Grant (CESG). Under the CESG program, the Canadian government tops up your annual contribution by 20%, with the funds paid directly to the RESP.

For each beneficiary, the maximum annual grant is $500, and the maximum lifetime grant is $7,200.

In-Trust Accounts (ITFs)

In-Trust Accounts (ITFs)

An In-Trust Account can be a great way to save for a child’s post-secondary education. The investor, commonly known as the trustee, manages money or other assets for a child (the “beneficiary”) until the child reaches the age of majority. At that point, the trustee can make any necessary arrangements for the money to become available to fund the child’s schooling.

There may be tax advantages too! With a properly structured account, your child may pay taxes on the growth or capital gain in an in-trust account. Since your child will probably have a lower taxable income than you, he or she could be taxed at a lower rate, and possibly pay no tax at all.

Key benefits of an In-Trust Account

  • You can contribute as much money as you want.
  • All capital gains may be taxed in the hands of the child.
  • If funds for an in-trust account come solely from Child Tax Benefit payments or an inheritance, income is taxed in the hands of the child.
  • Money stays in the hands of the child if he/she decides not to pursue post-secondary education.

You should know that, as the donor, you will be taxed on all income including interest, dividends, foreign, and other income if earned while you are a resident of Canada during the applicable year.

Scholarship Trust Funds

Scholarship Trust Funds

A Scholarship Trust Fund is a form of a Group or Pooled Savings Plan. These funds generally have age restrictions as to when an account can be open for a child and an age limit for claiming scholarships.

However, with the government relaxing many of the rules related to education savings plans, the Scholarship Trust Fund could appeal to some investors.

A key feature of Scholarship Trust Funds is that each individual’s contributions and the Federal Government’s portion are pooled and invested in government-guaranteed investments. The savings can earn interest that compounds in a tax shelter.

At the plan’s maturity, the accumulated funds or principal balance is returned to the contributor (subscriber), and the accumulated interest and Federal Grant is returned to the student, intended to assist with the expenses of post-secondary education.

Although the Scholarship Trust Fund is designed to help students cover the cost of higher education, the government has relaxed the rules, whereby should the student not pursue post-secondary studies, the subscribers can receive their principal, interest, and interest earned on the Federal Grant, and pay any tax or penalties in return.

While the Scholarship Trust Fund is an option for education funding, GP Wealth does not provide this form of savings vehicle.

Canada Education Savings Grant (CESG) Credits

Learn about Canada Education Savings Grant (CESG) Credits

The Canadian government helps families save for their child’s higher education through a grant program known as the Canada Education Savings Grant (CESG). The grant is paid directly into a Registered Education Savings Plan (RESP).

It’s worth at least 20% of the annual contribution, up to a maximum of $500 per year per beneficiary (or up to a maximum of $600 depending on the net income of the child’s family) until the year of the beneficiary’s 17th birthday.

Eligibility for the CESG

Every child up to and including age 17 is eligible to receive the CESG, provided:

  • The child is a Canadian resident
  • The child has a valid social insurance number (SIN)
  • The child is named as a beneficiary of an RESP
  • Money has been put into the RESP

The amount of the CESG

The amount of the grant is based on your family income, and the amount can change over time as your family income changes. No matter what your net family income is, the grant provides at least 20 cents for every dollar on the first $2,500 of annual RESP savings made on behalf of a child.

  • If your net family income is below $37,885*, the grant will be 40 cents for every dollar on the first $500 you save in your child’s RESP each year.
  • If your net family income is between $37,885* and $75,769*, the grant will be 30 cents for every dollar on the first $500 you save in your child’s RESP each year.

*This amount is updated each year based on the rate of inflation.

Four Strategies Beyond RESPs

Four Strategies Beyond RESPs

Contributing to a Registered Education Savings Plan (RESP) easily ranks as one of the best financial moves you can make for your children. But it’s not the only financial planning strategy you and your family can undertake.

There are several government-sponsored options that will help you decrease expenses today and build your children a financially sound tomorrow.

Here are four savvy strategies to consider:

Invest in an RESP

An RESP is one of the best ways to save for your child’s post-secondary education – because it’s both a tax-efficient savings vehicle and it allows you to take advantage of the Canada Education Savings Grant (CESG). Currently, the government will contribute a CESG amounting to 20% of your annual RESP contribution directly to the RESP, to a maximum of $500 per year per beneficiary. The lifetime CESG maximum per beneficiary is $7,200.

File a Yearly Tax Return

To get the most out of tax-related bonuses and government grants for families, parents should file a tax return every year – even if there is no income to report.

Take Advantage of the Canada Child Benefit (CCB)

The Canada Child Benefit (CCB) was introduced by the federal government in 2016 as a replacement for several previous initiatives, including the Canada Child Tax Benefit (CCTB), the Universal Child Care Benefit (UCCB) and the Family Tax Cut, also known as income splitting.

Under the CCB program, families with children younger than age six will receive an annual tax-free benefit of up to $6,400 per child. Those with children between the ages of six and 17 will receive up to $5,400 annually. Households with children with annual income below $30,000 will receive the maximum payment. Families whose children qualify for the Disability Tax Credit can receive an additional amount as part of their Canada Child Benefit, up to a maximum annual benefit of $2,730 per eligible child.

Applications for the CCB can be made through the Canada Child Benefits Application, available on the Canada Revenue Agency website.

Take Advantage of the Canada Learning Bond (CLB)

The Canada Learning Bond (CLB) is a federal government initiative entitling eligible RESP beneficiaries to a grant of up to $2,000. An initial CLB of $500 is provided in the first year of entitlement.

Subsequently, additional CLBs in the amount of $100 per year are provided for a period of 15 years, as long as the beneficiary meets the eligibility requirements. Among the requirements, the beneficiary must be 15 years of age or younger in the benefit year, and the beneficiary’s parent or primary caregiver must be entitled to the National Child Benefit for at least one month of the benefit year.

RESP FAQ

Registered Educational Savings Plan FAQ

The rules governing Registered Education Savings Plans (RESPs) are complex, and every family situation is different. In this FAQ, we answer the most common questions asked about registered educations savings plans (RESPs). If you have any specific questions, send us an email and we would be pleased to help.

Setting up an RESP

What is GP Wealth Management’s Investment Approach?

You must complete the RESP application form and determine if you require an individual RESP (one beneficiary) or a family RESP (more than one beneficiary). Please be aware that different application forms are required.

Does the beneficiary require a Social Insurance Number (SIN)?

A person does not need a SIN to become a beneficiary of an RESP but must obtain one in order to receive the CESG. The form for a SIN application can be completed online and printed for signatures by clicking here.

How do I apply for a SIN?

Most cities have a Human Resources Development Canada (HRDC) office (look in the blue pages of your phone book for a location and phone), where you can drop off or mail in a completed SIN application form. Or you can download an application form by clicking here.

You can visit the HRDC website for more information on how to complete the form by clicking here. Please note that you will need to provide an original copy (or notarized copy) of each beneficiary’s birth certificate. There is no fee for an initial SIN.

Who makes the application for the grant?

The administrator of the plan will make the application for the CESG grant on behalf of the subscriber.

Can I set up a Pre-Authorized Chequing (PAC) plan to contribute to an RESP?

Yes. With the maximum CESG credit of $500 per year allowable per beneficiary, you may want to consider arranging a monthly deposit of $208.33 per month ($2500 per year).

Family Plan versus Individual Plan

What is GP Wealth Management’s Investment Approach?

An individual RESP Plan set up by the subscriber can only have one beneficiary. A subscriber may designate anyone as the beneficiary of the plan, including himself/herself or his/her spouse.

Does the beneficiary require a Social Insurance Number (SIN)?

This is an RESP set up by a subscriber on behalf of one or more individuals designated as beneficiaries. However, each beneficiary must be under 21 years old at the time of designation and must be related to each subscriber by blood or adoption. For these purposes, your children, grandchildren, brothers and sisters are related to you by blood. Your nieces and nephews are not related to you by blood. As a subscriber, you can’t designate yourself or your spouse as a beneficiary under the Family Plan.

Investment Options

What is GP Wealth Management’s Investment Approach?

An RESP is restricted to qualified investments which are the same as qualified investments for an RRSP.

Who can contribute to an RESP?

Anyone can contribute to an Individual Plan but only a blood relative may contribute to a Family Plan. All contributions are considered to have been made by the subscriber.

Can I set up a RESP for my child even though I am living abroad?

Yes. As the subscriber, you need not be a Canadian resident to qualify for the CESG. However, the beneficiary must be a Canadian resident.

How long can I contribute to an RESP?

Contributions can be made up to and including the 22nd year of the plan. An RESP must be terminated on or before the last day of the 25th year in which the plan was entered into.

Contributions and Withdrawals

Is there a minimum contribution level?

Generally, no. However, some plans have a $500 minimum to open an account.

Can I determine how the contribution money will be allocated between the beneficiaries (in a Family Plan)?

Yes. You may indicate the allocation you desire on the application form as long as the total contribution per beneficiary does not exceed $50,000. You may change this percentage at any time by calling your financial advisor.

What happens when a beneficiary is ready for post-secondary school?

The beneficiary will receive educational assistance payments (EAPs), which include accumulated earnings and grant money received from the plan. The EAPs are spread out over the years the full-time student is enrolled in a qualifying institution.

Please note that the investment earnings portion (growth) is taxed at the student’s income level. There may not be any taxes to pay however if the student is in the lowest tax bracket at that time.

Can I withdraw money contributed to an RESP for non-educational purposes?

You, as a subscriber, can withdraw your money at any time, however, there may be an impact on the grant you have received. If contributions are withdrawn from an RESP that contains the CESG, and no beneficiary is enrolled in a qualifying educational program and eligible to receive an EAP, you may have to return all of the CESG.

Tax Implications and Over-Contributions

What happens if I over-contribute to the plan?

For the year 2007 and subsequent years, there is no annual contribution limit, only a lifetime limit of $50,000. There is a penalty of 1% per month imposed on you, the subscriber, on the over-contributed amount (over $50,000) until the over-contribution is withdrawn. If there is more than one RESP for a beneficiary, you must keep track of all contributions made to your RESPs.

How will I know if there has been an over-contribution?

Most mutual fund companies track contributions, however, it is ultimately your responsibility to ensure that you have not over-contributed to the plan(s).

Can original contributions be paid back to the subscriber tax-free?

Yes. The contributions may be withdrawn by the subscriber tax-free at any time during the lifetime of the RESP. However, if they are withdrawn before the beneficiary is registered in an eligible institution, the CESG will have to be repaid to the government and the CESG grant is suspended for two years.

Ideally, contributions should not be withdrawn from the RESP before the maximum CESG has been received from the government and then paid out to the beneficiary. The original contribution amount belongs to the subscriber and can be retained or assigned to the beneficiary.

CESG FAQ

Canadian Educational Savings Grants FAQ

In this FAQ, we answer the most common questions asked about Canada Education Savings Grants (CESGs). If you have any specific questions, send us an email and we would be pleased to help.

What is Human Resources Development Canada (HRDC)?

HRDC is the branch of the Federal Government of Canada that is responsible for monitoring and paying the CESG.

Is the grant included in the calculation of $50,000 lifetime contribution to an RESP?

No. The limits exclude the grant, as well as distributions and income earned on the investment.

When is CESG money paid out?

Your contribution data is forwarded electronically by the administrator of your RESP to HRDC. The administrator will receive a lump sum payment from HRDC, which will be applied to purchase additional units in your RESP account.

Can the CESG amount be carried forward?

Yes. If you contribute less than $2,500 in any given year, you may apply for the unclaimed CESG in the following years up to a maximum of $1000 per year and a lifetime total of $7,200. For example, if you set up a plan in 2007 and contribute $5,000, you are eligible for a $500 grant for 2007 and a $500 grant for 2006.

How is the money taxed?

This is the great thing: income accumulates in the plan tax-free! Both the CESG and accumulated earnings, when paid out to the beneficiary for educational purposes, are taxed as income in the hands of the beneficiary. If the student is in the lowest tax bracket, no tax whatsoever needs to be paid. The return of the contributions to the subscriber is not taxable.

If I have more than one RESP, which account will receive the CESG?

Where multiple applications for the CESG are made in the same quarter, the CESG is deposited to the RESP to which the first contribution was made in the respective quarter. If contributions relating to the same beneficiaries are made on the same date, HRDC will automatically split the grant money proportionally.

Does CESG contribution room accumulate for children under age 18 even if an RESP doesn’t yet exist?

Grant room accumulates every year from December 31, 1997, until the year of their 17th birthday, whether or not they have an RESP. This grant room can be carried forward to future years’ RESP contributions.

What is the maximum age a child can be to qualify for the CESG?

HRDC will only pay grants to RESPs of beneficiaries up to the year of their 17th birthday. For beneficiaries aged 16 and 17, the grant will only be paid for one of the following reasons:

  • There have been contributions to the RESP of at least $100 per year in any 4 years prior to the year in which they turned 16.
  • Previous contributions totaled at least $2,000 before the beneficiary turned 16.

ITF Accounts FAQ

ITF Accounts FAQ

In this FAQ, we answer the most common questions asked about in-trust accounts (ITFs). If you have any specific questions, send us an email and we would be pleased to help.

Why choose an in-trust account to save for a child’s education?

In-trust accounts have at least three compelling benefits that make them a good choice for building a higher-education nest egg:

  1. 1
    First, no maximum limit applies to what can be contributed on an annual or total basis through an in-trust account.
  2. 2
    Second, if your child does not go on to post-secondary education, he or she may use the money for any other purpose.
  3. 3
    Finally, the capital gain attribution rules that apply to in-trust accounts offer tax-saving opportunities, which can be highly beneficial if you’re saving for a child’s education.

Equity mutual funds realize most of their returns from capital gains, rather than dividends or interest. If you contribute to an in-trust account established primarily to provide capital gains, the resulting tax on capital gains, if any, may be paid by the child. And since a child will normally have a lower taxable income than an adult, less tax, if any, will be paid. That means more money will be available to cover your child’s education expenses. Please note that the income (interest and dividends) generated by the mutual fund may be taxed in the hands of the contributor.

Does the beneficiary have to be specified?

Yes. If a beneficiary of an in-trust account is not named, one of the major criteria for establishing the in-trust relationship is missing. Without a beneficiary, you can’t determine the ownership or tax treatment of the account.

How is an in-trust account taxed?

Briefly, the rules are:

  • All income (interest, dividends, foreign and other income) is attributed to the contributor if it was earned during a year in which the contributor was resident in Canada. The contributor must include this amount in his or her income and pay the related taxes.
  • If funds are provided solely from Child Tax Benefit payments or an inheritance, the income is taxed in the hands of the child.
  • All capital gains on the account, whether from distributions from a mutual fund or sale of any assets in the account, may be taxed in the hands of the child.
  • The trustee is responsible for providing documentation of the source of the funds in an in-trust account and for ensuring appropriate income tax treatment.

See your Financial Advisor for more tax details, or ask for our taxation bulletin on in-trust accounts.

What happens when non-cash assets are contributed to an in-trust account?

If you contribute or transfer assets to an in-trust account, you are considered to have disposed of these assets at fair market value on the transaction date. If the market value of the transferred assets is greater than their original cost, the contributor may be subject to capital gains tax. The trust would then be deemed to have acquired these assets at fair market value on the transaction date.

What if an unrelated party gives a gift to the in-trust account?

If the contributor deals at arm’s length with a child (i.e., is generally not related to the child, neither an aunt nor an uncle), the attribution rules described here generally do not apply. Assets would still be transferred to the account as though the contributor had sold them at fair market value, and the contributor may be taxed accordingly. However, all income and capital gains may be taxed in the hands of the child.

Can the trustee take assets out of the account?

The trustee manages, but is not entitled to, the benefit of the funds. Thus, any assets taken out of the account must be used for the child’s benefit.

Does an in-trust account need to be formal?

An in-trust account is an informal trust because the only document that establishes the trust relationship is the investment contract containing the in-trust account designation. To be valid, an in-trust account requires:

  • A contributor – the person(s) who is (are) giving a gift or contributing an asset to someone else. He or she is usually an adult blood relative.
  • A beneficiary – the person(s) who benefit(s) from the account assets. He or she is usually a minor blood-related child. The beneficiary, not the contributor or trustee, owns the assets.
  • A trustee – the person who manages an account’s assets on the beneficiary’s behalf. The trustee manages the assets until the child reaches the age of majority; the trustee has legal control over the assets, but the child owns them.
  • Assets – Money or other assets contributed by the contributor. In a trust relationship, someone manages assets for someone else.

Canada Learning Bond (CLB) FAQ

Canada Learning Bond (CLB) FAQ

In this FAQ, we answer the most common questions asked about Canadian Learning Bond (CLB). If you have any specific questions, send us an email and we would be pleased to help.

What is a Canada Learning Bond (CLB)?

It’s a Government of Canada grant deposited directly into a child’s Registered Education Savings Plan (RESP) account to help modest-income families save for their child’s post-secondary education.

What are the eligibility requirements?

The main eligibility requirements are as follows:

  • The child must be born after December 31, 2003.
  • The child’s family must receive the National Child Benefit Supplement (The Supplement is over and above the Canada Child Tax Benefit and is usually received by lower-income families).

Visit the Canada Revenue Agency website to find out if you qualify for the CLB.

Important Notice:

Both the Canada Child Tax Benefit and the National Child Benefit Supplement were replaced by the Canada Child Benefit as of July 1, 2016. However, you can still apply to get payments for these benefits if you were eligible and had a child who was under the age of 18 before July 2016, even if you did not apply in previous years:

How much money can my child receive through the CLB?

Up to $2,000! For qualified families, after you open an RESP in your child’s name, the government will immediately make a one-time deposit of $500 into the account. In addition, for families that continue receiving the National Child Benefit Supplement, the government deposits an extra $100 a year for up to 15 years. (The government also tops up the first $500 deposit with a $25 payment to help cover the cost of opening an RESP.)

How much of my own money do I need to deposit into my child’s RESP?

There’s no requirement for you to contribute to the RESP. The Government of Canada will deposit the CLB into the child’s RESP even if it’s empty. Once deposited, the funds will begin growing through interest income and investment earnings.

However, keep in mind that if you contribute to your child’s RESP, your child will qualify for the Canada Education Savings Grant (CESG), which will help you save even faster.

For more information, visit the Canada Learning Bond page on the Government of Canada website.

Consider an RESP Loan

Consider an RESP Loan

Why? Because in order to collect the full amount of government grants that your child is eligible to receive in each RESP contribution year, you need to use up the grant-eligible contribution room that has accrued for that year.

If you don’t have the funds on hand due to, for example, a temporary cash shortage, an RESP loan could help bridge the gap.

Important Point

The RESP contribution deadline falls each year on December 31. All contributions for a given calendar year must be made before that date. An RESP loan could also worth considering for those who began saving when their children were older In such cases, there would be less time for contributions and investment growth.

This means larger contributions would be required each year to maximize the savings opportunity, compared to the case of someone who started an RESP when their child was young. Bottom line, borrowing money to maximize your RESP contributions could make the difference by helping you build the education nest egg your child will eventually need.

More Reasons to Take Out an RESP Loan

  • You can increase your contributions without having to modify your budget.
  • You can benefit from the higher yield associated with tax-deferred earnings on interest income and investment growth.
  • You gain even more opportunity to benefit from higher yield thanks to government grants equal to 20% (30% in Quebec) of your annual RESP contributions.
  • You can realize a tax-planning advantage since the tax-deferred earnings are eventually taxed in the hands of the beneficiary.
  • You can carry forward any unused grant amounts.
  • You maximize the Canada Savings Grant contribution, particularly if your child is 12 years of age or older and about to start high school.
  • With interest rates currently at such low levels, the borrowing cost will be relatively low compared to if rates were higher.

Why Open an RESP Loan with Us?

  • You can pay off your loan at any time
  • We provide competitive interest rates

RRSP Loan Provider

GP Wealth Management offers RRSP Loans through B2B Bank, a subsidiary of Laurentian Bank. Learn more about B2B Bank.

Disclaimer: All Investment Loans are subject to meeting lending criteria. Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines.

Recent Articles

Scholarships and Bursaries

Scholarships and Bursaries

October 2021

With the cost of post-secondary education climbing steadily, students have more reason than ever to explore their eligibility for non-repayable monetary awards such as scholarships and bursaries.

Keep in mind that research into these alternative financing options should begin in the second or third year of high school. That’s because some of the eligibility requirements, like performing community service, must be considered well ahead of application time

Traditionally, the term scholarship referred to student financial awards based on academic merit, while the related term bursary referred to awards based on financial need. Nowadays, however, these terms are often used interchangeably by those providing the funds.

There are numerous providers of scholarships and bursaries. The list includes schools, governments, companies, charities and even private individuals.

Similarly, there are many different types of scholarships and bursaries.

Some are open to all students, while others are “regional” (applicants need to originate from a particular town or area) or narrowly designated for a certain kind of student (someone with a disability or specific cultural background).

There are good resources on the web to assist you in learning what’s available. Get started in your research by visiting sites like univcan.ca and studentawards.com.

Maclean’s University Rankings (exp)

Maclean’s University Rankings

October 2020

Canadian students interested in attending university are fortunate to have a wide range of options, from small rural schools to large urban campuses. But with so many universities and programs to choose from, how do you pick?

The leading source of information on Canadian universities and colleges is the annual Maclean’s University Rankings, published by Maclean’s magazine.

If your budding scholar is starting to think about post-secondary schools, we encourage you to pick up the 2021 issue at your local newsstand or visit macleans.ca/hub/education-rankings.

Maclean’s determines its rankings based on information supplied by the universities, publicly available data and surveys of students, faculty, administrators and others.

Rigorous methodology

The magazine’s staff apply a rigorous methodology to offer a picture of the best Canadian universities in 10 program areas.

To be included in the program rankings, institutions must offer a program in the relevant area and have produced a minimum number of academic papers that contribute to advancements in knowledge and learning. The 10 program areas are education, business, nursing and psychology, computer science, engineering, biology, environmental science, medicine and mathematics.

Maclean’s University Rankings is a valuable resource that allows you to compare schools and programs based on overall scores as well as specific measures such as student satisfaction and school reputation.

For students interested in pursuing their higher education in Ontario, another good information source is ontariouniversitiesinfo.ca. This online guide, known in short as OUInfo, provides comprehensive details about programs of study, admission requirements, fees, scholarships and more.

Budgeting Apps for Kids

Budgeting Apps for Kids

October 2021

Whether your kids are in pre-school or high school, it’s always the right time to teach them good money habits. But where to start?

Fortunately, with the help of easy-to-use budgeting apps, you can start imparting beginner concepts when your child is young and gradually advance to higher levels. Here are six apps you can use to improve your kid’s budgeting skills.

PiggyBot (Age range: 5-8)

PiggyBot is a colourful money tracker aimed at younger kids. No money is actually exchanged. Instead, the app acts as a virtual piggy bank that helps parents manage their child’s weekly allowance, extra payments and financial gifts. In addition, children can save for special purchases, uploading fun pictures for added motivation. Also, they can create virtual accounts with unique PIN numbers, giving them a greater sense of responsibility for their money.

Yuby (Age range: 5-12)

This app seeks to help children gain experience earning, spending, prioritizing and being responsible for their own money. The key features include a list view for keeping track of their chores and how much allowance they can earn, and an activity view of what they’ve made and spent, including details about each activity. There’s also a wish list that compares the cost of things they’re saving for and shows how much progress they’ve made.

RoosterMoney (Age range: 5-12)

A virtual allowance tracker, RoosterMoney is designed to help build good money habits while being simple for parents and fun for their children. Kids set savings goals, and the app monitors their progress with easy-to-understand charts. The app also keeps track of both how much kids have earned and how much is owed to them. A virtual “safe” option acts as a long-term savings account, allowing users to gain experience saving towards future financial objectives.

Bankaroo (Age range: 5-14)

A virtual bank for kids, Bankaroo lets parents reward their children for tasks, while children can open simulated accounts and track their virtual money as it accumulates. Created by an 11-year-old with help from her father, the app aims to teach kids how to be “money smart” by offering tools for learning how to budget income, save money, create goals and do basic financial accounting.

FamZoo Family Finance (Age range: 5-18)

This app functions as a virtual private family bank, with parents playing the role of “banker” and children the part of “customers.” Parents maintain visibility and control over all the accounts in the family through a shared online dashboard, while kids have separate sign-ins with access limited to their own accounts. In addition to teaching money-management skills, the app allows parents to transfer real money to their children through prepaid and reloadable debit cards.

Mint (Age range: Teens and older)

Perhaps the best-known of all budgeting apps, Mint is aimed at adults but can be suitable for teens who have jobs and bank accounts. The app lets you organize all of your finances, including chequing accounts, credit cards and investments, in one place. In addition, users can sign up for alerts regarding late fees, bill reminders, over-budget spending, rate changes and more.

Tips for Teaching your Child about Money (exp)

Tips for Teaching your Child about Money

October 2021

Paying advisor compensation is an integral part of receiving financial advice. To make informed decisions about your investments, you need to understand how your advisor is compensated and what you receive in return.

It’s never too early to teach kids about money.

As a parent or grandparent, you can begin establishing key fiscal skills, such as saving, with younger grade-schoolers. As children get older, they can start learning to make some complex decisions about money, such as deciding how to spend their allowance or how the family might budget for vacation activities.

Here are 5 smart tips that will help you communicate more effectively with your child about money, ensuring your message hits home and sticks.

Make it personal

Share your own experiences with money, including your mistakes. If you’ve opened an educational savings plan for your child, explain why and encourage a feeling of ownership and responsibility for building the account.
Make it involving

Whether you’re grocery shopping, paying bills or revising the family budget, give your child a role and encourage age-appropriate participation.

Play instructive games

Board games like Monopoly and the Game of Life can create many opportunities for important lessons about money. They’re fun for all ages, so gather the entire family in the parlour and see who emerges victorious.

Make it real

Ask your child for help comparing the cost of eating a meal at home vs. eating at a restaurant. Calculate the savings if you stayed home and ask your child to consider other ways the money could be used, from depositing it in a savings account to buying something the child really wants.

Teach the importance of saving for specific financial goals

As your child gets older, provide guidance on how good money management will allow them to afford the things they need when they need them. Try giving your child two money jars, one for saving and one for spending. This will help ensure the lesson becomes ingrained.

Teaching children to manage money responsibly requires patience and persistence

We encourage you to get started once your child is old enough to understand the basic concepts. If you have questions, we’d be pleased to answer them.

Tuition Fees Continue to Rise (exp)

Tuition Fees Continue to Rise

October 2020

You may have noticed that your year-end account statement has been enhanced with additional information that includes the performance of your investments. These enhancements are aligned with the financial industry’s new regulatory reporting requirements.

The price of a post-secondary education continued its upward climb across most of Canada for the 2019-2020 school year with the big exception being Ontario.

Following a provincially mandated 10% cut in tuition fees at publicly funded post-secondary institutions for the 2019-2020 year, Statistics Canada reports that tuition fees in Ontario for undergraduate programs declined 9.9%, while fees for graduate students decreased by 9.1%.

Conversely, tuition fees for undergraduate programs rose in eight provinces and the Yukon, while staying the same in Alberta. The increases ranged from 2.0% in P.E.I. and B.C. to 8.5% in the Yukon.

Similarly, graduate tuition fees rose in eight provinces (Yukon data was not available), with the increases ranging from 1.3% in B.C. to 4.1% in Saskatchewan, while staying the same in Newfoundland and Labrador.

It seems, nowadays, that large annual tuition increases have become inevitable. According to StatsCan, undergraduates pay approximately 40% more in tuition than they did 10 years ago. For parents and grandparents of young children, this means it’s more important than ever to start saving early — and to save regularly — for your little ones’ higher education.

Getting Started

Get started by estimating the expenses your children will incur during their post-secondary school years. Keep in mind that the cost of tuition, housing, books and incidentals continues to rise, so you must adjust your figures for anticipated inflation. Through this process, you can quite accurately determine the monthly, yearly or one-time deposit required to fund the future costs of education.

Next, you need to decide on the best investment vehicle to reach your savings goals.

The most popular educational savings vehicle today is the Registered Educational Savings Plan, or RESP, as it is commonly known. You also have other options, including an In-Trust Account and a Scholarship Trust Fund.

Read through the information and if you have any specific questions send us an email and we would be pleased to help.

RESPs Vs Scholarship Trust Funds

RESPs Vs Scholarship Trust Funds

October 2019

Not all education savings plans are equal.

RESPs offer the benefits of a simple cost structure and greater flexibility, while scholarship trusts tend to have fees and charges and, in some cases, more restrictive rules.

To help you make an informed decision when choosing an education savings plan for your child, we’ve created an easy-to-use chart that compares and contrasts their key features.

Registered Educational Savings PlanScholarship Trust Fund
A minimum deposit is usually not required.You must make a minimum deposit when you open the plan.
Anyone can open an RESP and contribute to it. You open a group plan for one child, with no flexibility to shift accumulated funds to another child.
Individual and family plans are available. When it's time for you to access your funds, these plans often have restrictions governing how much and how often your child can take EAPs, and which education programs are eligible.
If the child doesn't pursue further education after high school, you may be able to name another beneficiary.NA

How Contributions Work

Registered Educational Savings PlanScholarship Trust Fund
You decide when and how much money to put in, up to the lifetime contribution limit of $50,000 for a beneficiary. You put money in according to a set schedule, up to the lifetime contribution limit of $50,000 for a beneficiary.
If you have an RESP with a financial institution, you decide how to invest your money. The money you put in is pooled with contributions of other investors and investment decisions are made for you.

Withdrawing Unused Education Savings – RESP VS TFSA VS ITF

Withdrawing Unused Education Savings – RESP VS TFSA VS ITF

October 2019

What if you saved for your child’s higher education, but the child ends up not needing all the funds or not pursuing post-secondary studies at all?

At some point, you’ll want to use this money for another purpose. However, depending on the savings vehicle you chose, there will be factors to consider before making a withdrawal.

Registered Education Savings Plan (RESP)

The moment you collapse an RESP, any unspent Canada Education Savings Grant money will be returned to the public purse. This potentially leaves two discrete pools of money for you to deal with.

  1. 1
    Original contribution amount — you can withdraw your original contribution amount at any time on a tax-free basis because you paid tax on this money before investing it.
  2. 2
    Investment income (accumulated interest, dividends and capital gains) — These earnings are taxable upon withdrawal and subject to a 20% penalty. However, you have the option to roll as much as $50,000 into your RRSP, which will delay the tax payment, provided you have the RRSP contribution room.

In Trust For (ITF)

The money you’ve saved in an ITF account can be used for anything that would benefit your child or grandchild if they decide not to pursue post-secondary schooling. The contributor is responsible for tax on interest and dividends, while the beneficiary is responsible for tax on capital gains.

The benefits of an ITF include the fact that you can contribute as much money as you want, and capital gains get taxed in the hands of the child. Also, if funds for an in-trust account come solely from Child Tax Benefit payments or an inheritance, income is taxed in the hands of the child.

Tax-Free Savings Account (TFSA)

The beauty of using a TFSA to save for your child’s education is that, should your child decide not to pursue higher learning, there are no restrictions whatsoever on how the money gets used. Keep in mind that a TFSA cannot be opened in the name of a child under the age of 18.

But as a parent or grandparent who has opened a TFSA, you can choose to use the money you’ve saved for any purpose. You simply put money in and watch it grow tax-free until you need it.

Also, you may withdraw it at any time without a tax penalty or even much paperwork.

The Burden of Student Debt (exp)

The Burden of Student Debt

October 2021

For more and more young Canadians, their biggest concern is whether the cost of post-secondary schooling is worth the burden that comes with student debt.

According to a 2018 graduating student survey by the Canadian University Survey Consortium, 50% of students graduate with debt, and of those, the average debt reported was $27,929. Further, according to the Canadian Student Loan Program, paying off student debt takes most students about 10 years.

Starting last school year, the federal government reduced the interest rate on its floating-rate student loans by 2.5 percentage points to prime. Interest on fixed-rate loans was reduced 3 percentage points to prime plus 2.

Graduates also got a break from accruing interest during the six-month grace period students have after leaving school before they must begin paying off their debt. This means they will pay less interest in the long run.

Paying down loans is difficult

Still, many new graduates enter the workforce as unpaid internships, temporary workers or low-wage employees, which makes paying down their debt extremely challenging if not impossible. Having to repay a few hundred dollars a month for a decade is delaying other key life milestones, such as buying a home or having children. The following table shows that student debt is on the rise across all levels of post-secondary study.

*Bachelor’s includes bachelor’s degrees, degrees in medicine, dentistry, veterinary medicine and optometry, university certificates below bachelor’s degrees, and university diplomas below bachelor’s degrees. ** Master’s includes master’s degrees, university diplomas above bachelor’s degrees, and university certificates above bachelor’s degrees. Source: Statistics Canada’s National Graduates Survey (NGS), Student Debt from All Sources

How Much Do Grads Make In Canada?

How Much Do Grads Make In Canada?

October 2021

Contributing to the cost of your children’s higher education is one of the best ways you can help them achieve their important life goals and earnings potential. Research consistently shows that post-secondary graduates are more likely to be employed, and they earn more than those who did not continue their studies past high school.

According to a January 2020 report called How Much Do They Make?, on average five years after graduation, Canadian graduates in architecture, engineering and related technologies earn the most among college-level certificate, college-level diploma and bachelor’s degree students (respectively, $60,500, $64,500 and $80,400).

Among master’s and doctoral graduates, those from business, management and public administration earn the most ($103,800 and $123,600, respectively). However, not all degrees are equal when it comes to earning potential.

On average, STEM graduates earn more

The report, which was produced jointly by the Education Policy Research Initiative (EPRI) and the Labour Market Information Council (LMIC), also shows that grads in STEM studies (science, technology, engineering and mathematics) had higher earnings than those in business, humanities, health, arts, social science and education – 23.9% more for men and 11.5% for women.

Based on cumulative earnings, the relationship between higher education and earnings is even more evident.

York study looks at cumulative earnings

The Price of Knowledge, a York University research report on access to higher education and student finance in Canada, found that, compared to a high school graduate over a 40-year span, a college graduate will earn $394,000 more in cumulative income, a bachelor’s degree holder will earn $745,800 more in cumulative income, and a post bachelor’s degree will earn $1,165,280 more in cumulative income.

Further, Statistics Canada points out that this type of earnings data tends to underestimate the real earnings differences between workers with higher and lower levels of education because they compare only workers employed on a full-time basis. However, those with less education are more likely to be unemployed and, therefore, to have no earnings at all.

Get Started

Saving for your child’s higher education starts with making your first contribution. Get started by estimating the expenses your children will incur during their post-secondary school years. Saving for your child’s higher education starts with making your first contribution.

Get started by estimating the expenses your children will incur during their post-secondary school years. Keep in mind that the cost of tuition, housing, books and incidentals continues to rise, so you must adjust your figures for anticipated inflation. Through this process, you can quite accurately determine the monthly, yearly or one-time deposit required to fund the future costs of education.

Don’t Pass Up Free Government Contributions to Your Child’s Higher Education

Don’t Pass Up Free Government Contributions to Your Child’s Higher Education

April 2021

There are two primary investment benefits to opening a Registered Education Savings Plan: RESPs are tax-advantaged in that the funds grow tax-free until withdrawn, and they provide access to government grants, which further accelerate the rate of savings.

Despite these advantages, RESPs are woefully underused. According to Statistics Canada’s annual population estimates, there were more than seven million children (up to age 17) eligible to receive the CESG in 2017. Yet only slightly more than half, 52.3%, were beneficiaries of an RESP and had received the Canada Education Savings Grant (CESG) at least once since 1998.

The CESG Explained

The CESG consists of a basic amount of grant (Basic CESG) and an additional amount of CESG (Additional CESG) for beneficiaries from low- and middle-income families. The government contributes a maximum lifetime amount of $7,200 in Basic and Additional CESG to each beneficiary.

Also, low-income families can access an additional benefit called the Canadian Learning Bond. It’s astounding that so many Canadian families with young children are failing to take advantage of RESPs. With few exceptions, an RESP is the absolute best way for every person in Canada to save and invest towards higher-education studies.

Getting Started

Get started by estimating the expenses your children will incur during their post-secondary school years. Keep in mind that the cost of tuition, housing, books and incidentals continues to rise, so you must adjust your figures for anticipated inflation. Through this process, you can quite accurately determine the monthly, yearly or one-time deposit required to fund the future costs of education.

Next, you need to decide on the best investment vehicle to reach your savings goals. The most popular educational savings vehicle today is the Registered Educational Savings Plan, or RESP, as it is commonly known. You also have other options, including an In-Trust Account and a Scholarship Trust Fund.

Read through the information and if you have any specific questions send us an email and we would be pleased to help.

RESP or In-Trust For (ITF) Account – Which to Choose?

RESP or In-Trust For (ITF) Account – Which to Choose?

July 2021

Suppose you or your parents decide to put aside money for your child in the child’s name. Or what if a child who is a minor receives an inheritance that you think should be invested for the child’s future. One investment option is a Registered Education Savings Plan (RESP).

Created by the federal government, an RESP helps you save more effectively for post-secondary education by allowing tax-free growth inside the plan and by topping up your savings with government grants.

Benefits of an RESP

  • Up to $7,200 in Government Grants
  • Tax-Sheltered Growth
  • Flexible Investment Options
  • Tax Savings

Another option is an in-trust fund (ITF) account. An ITF is an “informal trust” you can create at a financial institution to invest funds on behalf of a minor. The account is set up as a trust because children under the age of majority cannot enter into binding financial contracts, nor can they accept a gift under a will.

You or another adult is then responsible for investing funds for the child and signing the contract on the child’s behalf.

Benefits of an ITF

An ITF is a good choice for special situations like the one described above. It can also be used as a second investment vehicle to be used to save for post-secondary education after you’ve already maxed out your RESP contribution room.

While RESPs and ITFs are essentially equal when it comes to investing options and who can contribute, there are many important differences in terms of control, ownership, flexibility, grant availability and especially taxation. Some of the key differences are detailed in the chart below.

Getting Started

Get started by estimating the expenses your children will incur during their post-secondary school years. Keep in mind that the cost of tuition, housing, books and incidentals continues to rise, so you must adjust your figures for anticipated inflation. Through this process, you can quite accurately determine the monthly, yearly or one-time deposit required to fund the future costs of education.

Next, you need to decide on the best investment vehicle to reach your savings goals. The most popular educational savings vehicle today is the Registered Educational Savings Plan, or RESP, as it is commonly known. You also have other options, including an In-Trust Account and a Scholarship Trust Fund.

Read through the information and if you have any specific questions send us an email and we would be pleased to help.

How to Strategically Withdraw Money from an RESP (exp)

How to Strategically Withdraw Money from an RESP

October 2020

Upon enrolling in an eligible post-secondary school as a full-time student, the beneficiary can begin withdrawing funds. You want to approach withdrawals strategically to ensure the funds are taken out in the most tax-efficient way possible. An RESP account contains two separate pools of funds, which are subject to different tax treatment:

Upon enrolling in an eligible post-secondary school as a full-time student, the beneficiary can begin withdrawing funds. You want to approach withdrawals strategically to ensure the funds are taken out in the most tax-efficient way possible. An RESP account contains two separate pools of funds, which are subject to different tax treatment:

  1. 1
    Original contributions: A post-secondary education capital (PSE) withdrawal is money taken from the capital you invested. There are no tax implications to this type of withdrawal.
  2. 2
    Grants and plan earnings: An education assistance payment (EAP) withdrawal is money taken from any government grants to the plan and accumulated earnings. When EAP money is withdrawn, it counts as income in the hands of the beneficiary.

Original contributions: A post-secondary education capital (PSE) withdrawal is money taken from the capital you invested. There are no tax implications to this type of withdrawal.

Grants and plan earnings: An education assistance payment (EAP) withdrawal is money taken from any government grants to the plan and accumulated earnings. When EAP money is withdrawn, it counts as income in the hands of the beneficiary.

Each time you take money out of the RESP, you must tell your provider which funds you are accessing.

Withdrawal Strategy for Lower-Income Students

Most students don’t have to worry about paying tax on their RESP withdrawals. That’s because their income is low to start and they also have tuition costs and other tax credits that keep their income below the taxable threshold. For these students, it’s generally advisable to start by withdrawing the maximum from the EAP pool until the funds are gone.

At this point, should your child graduate or leave school when there are still funds in the plan, you’re protected. Since the grant money is used up, you won’t have to give any back to the government. And because the remaining funds consist of your original contributions to the plan, you can remove it without paying tax.

Withdrawal Strategy for Higher-Income Students

Some students may earn, in any given year, sufficient income to wind up owing tax. In these years, it’s advisable to withdraw funds from the non-taxable PSE pool, which consists of the original capital you invested.

There’s a lot to learn about RESPs. It’s a good idea to educate yourself thoroughly to ensure you get the most benefit from your RESP investments.

Turn Your Child’s RESP into a Financial Literacy Tool

Turn Your Child’s RESP into a Financial Literacy Tool

With consumer debt reaching new heights, it’s never been more important to teach children about money. Why not reinforce the concept of saving by opening an RESP and encouraging your children to contribute?

First off, the decision to open an RESP is a financial literacy lesson in itself: not all savings vehicles are created equal. The government grant amounts to 20 percent of the first $2,500 contributed each year. That’s like picking up 20 percent interest out of the gate – a result that would be hard to duplicate in any other investment.

When your children start kindergarten, explain that you’re saving for them to go to “big school” when they’re older, so they can choose to do whatever they want in life. This will not only promote saving but also inspire them to reflect on their futures.

To get them actively involved, encourage them to contribute a portion of their allowance, piggy-bank savings or summer-jobs earnings — and show how their money is growing. And when you feel they’re ready, introduce them to the idea of regular monthly saving.

This will not only help them become disciplined savers but also teach them the benefits of compounding, which occurs when you earn interest on your accumulated savings.

Get Started

Get started by estimating the expenses your children will incur during their post-secondary school years. Keep in mind that the cost of tuition, housing, books and incidentals continues to rise, so you must adjust your figures for anticipated inflation. Through this process, you can quite accurately determine the monthly, yearly or one-time deposit required to fund the future costs of education.

Next, you need to decide on the best investment vehicle to reach your savings goals. The most popular educational savings vehicle today is the Registered Educational Savings Plan, or RESP, as it is commonly known. You also have other options, including an In-Trust Account and a Scholarship Trust Fund.

Read through the information and if you have any specific questions send us an email and we would be pleased to help.

An RESP Can Help Kids in Life and Learning

An RESP Can Help Kids in Life and Learning

October 2022

More than just a savings vehicle, an RESP is a tool you can use to help your kids develop positive attitudes and behaviors in key areas, including personal finances and higher education.*

Support your kids in life and learning

By starting to save at a young age, children gain early exposure to the basic tenants of financial literacy—such as the sooner you begin saving, the better, and your deposits will grow over time.

The act of participating in an education savings plan has other benefits too. If your child knows that you’re actively saving for his or her post-secondary education, this can instill greater academic motivation, resulting in higher educational aspirations, improved value placed on education and enhanced self-esteem.

The question then becomes, which post-secondary institution would you like to attend after high school? Rather than, will you go on to pursue post-secondary education?

How RESPs Work

The Registered Education Savings Plan (RESP) combines tax-deferred investment growth and government grants to help you save for your child’s post-secondary schooling. RESPs are highly flexible and allow you to fund many different educational journeys, including university, college, trade school, CEGEP (Quebec) and apprenticeship programs.

A huge advantage to saving through an RESP is the Canada Education Savings Grant (CESG), a federal government program that helps you save faster.

Why Saving for Education Matters*

Anticipated changes in student’s attitude and behaviours from education savings

Financial:

  • More informed about costs
  • Improved financial literacy
  • Better financial management (incl. budgeting)

Educational:

  • Higher education aspirations
  • Increased value placed on education
  • Improved academic focus and achievement
  • Improved self-esteem

* Andrew Parkin, “Family savings for post-secondary education – A Summary of Research on the Importance and Impact of Post-Secondary Education Savings Incentive Programs.” The Omega Foundation. November 2016.

Managing the Risk and Return of your RESP: A Lifecycle Approach

Managing the Risk and Return of your RESP: A Lifecycle Approach

October 2022

When saving for retirement, most investors choose to be more heavily weighted in higher-risk investments like equities in the early years and shift to lower risk, mostly fixed income, investments as their retirement date approaches. Did you know that the same basic investment strategy can work well for your child’s RESP?

The advantage of this approach is you get higher growth potential upfront to help the RESP keep pace with the rising cost of education. Of course, just like when saving for retirement, you’ll want to change to a conservative asset mix a few years before the money is needed to reduce volatility and the potential for erosion of capital.

Example asset allocation lifecycle for an RESP

  • Shortly after your child is born, consider an aggressive RESP portfolio mix of 70% to 90% equities, with the rest in bonds.
  • When your child is 13, start replacing the equities with bonds.
  • When a child is about 18, a risk-averse strategy would be to sell the remaining equities and shift all the funds into stable fixed-income assets.
  • A parent who continues to have an appetite for risk could keep a small portion in equities to take advantage of the potential for growth.

Get Started

Your first step is to incorporate your child’s age into your decision-making. This will allow you to determine where you’re at in your RESP’s asset allocation lifecycle. If you have any questions, send us an email and we would be pleased to help.

Tips for Teaching your Child about Money

Tips for Teaching your Child about Money

October 2021

It’s never too early to teach kids about money.

As a parent or grandparent, you can begin establishing key fiscal skills, such as saving, with younger grade-schoolers. As children get older, they can start learning to make some complex decisions about money, such as deciding how to spend their allowance or how the family might budget for vacation activities.

Here are 5 smart tips that will help you communicate more effectively with your child about money, ensuring your message hits home and sticks.

Make it personal

Share your own experiences with money, including your mistakes. If you’ve opened an educational savings plan for your child, explain why and encourage a feeling of ownership and responsibility for building the account.

Make it involving

Whether you’re grocery shopping, paying bills or revising the family budget, give your child a role and encourage age-appropriate participation.

Play instructive games

Board games like Monopoly and the Game of Life can create many opportunities for important lessons about money. They’re fun for all ages, so gather the entire family in the parlour and see who emerges victorious.

Make it real

Ask your child for help comparing the cost of eating a meal at home vs. eating at a restaurant. Calculate the savings if you stayed home and ask your child to consider other ways the money could be used, from depositing it in a savings account to buying something the child really wants.

Teach the importance of saving for specific financial goals

As your child gets older, provide guidance on how good money management will allow them to afford the things they need when they need them. Try giving your child two money jars, one for saving and one for spending. This will help ensure the lesson becomes ingrained.

Teaching children to manage money responsibly requires patience and persistence.

We encourage you to get started once your child is old enough to understand the basic concepts. If you have questions, we’d be pleased to answer them.

Tuition Fees on the Rise (exp)

Tuition Fees on the Rise

October 2019

It’s getting more expensive to fund a post-secondary education. New data from Statistics Canada shows tuition fees for undergraduate programs jumped an average of 3.3 percent in the 2017-2018 school year to $6,571. Tuition fees for graduate programs rose an average of 2.4 percent to $7,086.

For a variety of reasons, your child might not require all the money that has accumulated in their RESP. Maybe your child is simply responsible and frugal. The student could decide to take a break from school with no set return date.

Or, possibly, a decision was made not to pursue post-secondary schooling. Whatever the reason, you’ll want to make the best use of the remaining funds. This includes mitigating, or delaying, any potential taxes owing.

Keep in mind that, if your RESP is a family-type plan, you could simply shift the funds to another child. However, if it’s an individual RESP (or if there’s money remaining in your family RESP after your last child has graduated), there are a few possible paths this could go down.

To begin, the moment you collapse the RESP, any unspent government grant money will be returned to the public purse. This potentially leaves two discrete pools of money for you to deal with:

Original Contribution Amount

You can withdraw your original contribution amount at any time on a tax-free basis because you paid tax on this money before investing it.
Investment income – Accumulated Interest, Dividends and Capital Gains

Any investment income that was earned within the RESP is taxable upon withdrawal and subject to a 20% penalty. However, you have the option to roll as much as $50,000 into your RESP, which will delay the tax payment, provided you have the RRSP contribution room.

Now, chances are the student will have already used up the investment income portion of the RESP, thereby relieving you of any tax burden. That’s because, for the purpose of being tax efficient, RESP withdrawal strategies are generally designed to spend this money first.

With this in mind, it’s more important than ever for parents to have a plan and start saving early for their children’s education.

We Can Help

If you have questions about funding your child’s post-secondary schooling, including setting up an RESP account, speak to your Financial Advisor or contact investor services at 1 800 608 7707.

What to Do with Unused RESP Funds?

What to Do with Unused RESP Funds?

October 2019

For a variety of reasons, your child might not require all the money that has accumulated in their RESP. Maybe your child is simply responsible and frugal. The student could decide to take a break from school with no set return date.

Or, possibly, a decision was made not to pursue post-secondary schooling. Whatever the reason, you’ll want to make the best use of the remaining funds. This includes mitigating, or delaying, any potential taxes owing.

Keep in mind that, if your RESP is a family-type plan, you could simply shift the funds to another child. However, if it’s an individual RESP (or if there’s money remaining in your family RESP after your last child has graduated), there are a few possible paths this could go down.

To begin, the moment you collapse the RESP, any unspent government grant money will be returned to the public purse. This potentially leaves two discrete pools of money for you to deal with:

Original Contribution Amount

You can withdraw your original contribution amount at any time on a tax-free basis because you paid tax on this money before investing it.

Investment income – Accumulated Interest, Dividends and Capital Gains

Any investment income that was earned within the RESP is taxable upon withdrawal and subject to a 20% penalty. However, you have the option to roll as much as $50,000 into your RESP, which will delay the tax payment, provided you have the RRSP contribution room.

Now, chances are the student will have already used up the investment income portion of the RESP, thereby relieving you of any tax burden. That’s because, for the purpose of being tax efficient, RESP withdrawal strategies are generally designed to spend this money first.

We’re Here to Help

If you require assistance setting up your child’s RESP plan, including implementing a tax-efficient withdrawal strategy, speak to your Financial Advisor or contact investor services at 1 800 608 7707.

The Advantage of Starting Today

Start today! Saving for your child’s education is the smart way to education planning.

October 2019

Let’s assume your child will begin a four-year undergraduate degree program eighteen years from now. Here are three different ways to have the money you’ll need.

The cost of waiting!

If you haven’t saved up, let’s assume you take out a loan for $70,000 at 5% and make annual payments of $5,500. It would take you 21 years to pay it back. And the total cost would be over $115,000!

That’s the cost of waiting, and it’s an expensive choice.

You can always pay as your child needs funding.

Let’s say you decide to pay for your child’s education on an as-needed basis during his or her time at school. This is still going to be tough because you’ll spend about $70,000 in after-tax dollars over four years. And that’s just for one child. It can mean a huge sacrifice at a time when you will have your own living expenses to worry about. Will you suddenly have that kind of money available? Probably not.

Get started!

You can start saving right now by investing in a quality mutual fund, an in-trust account or a Registered Education Savings Plan (RESP).

You have lots of flexibility too. You can invest a lump-sum amount today and let it grow, or you can invest a much smaller amount (e.g. $100) each month for 18 years for a total contribution of $21,600.

While your children are growing up, your money will also be growing. Assuming an 8 percent average annual compounding rate of return, you’ll have accumulated most, if not all, of the funding required. This is the smartest and the most efficient choice. As they say, there’s no time like the present, so get started right away and save yourself lots of worries!

How to Make Tax-Smart RESP Withdrawals

How to Make Tax-Smart RESP Withdrawals

July 2022

If you’ve been contributing to a Registered Education Savings Plan, and your child has enrolled in a postsecondary program, now may be the time to start making withdrawals.

However, before tapping into your funds, it’s wise to ensure you have a strategy for minimizing the tax implications. Here’s what you need to consider:

An RESP account contains two distinct pools of money: One consists of your original contributions, the other, accumulated grants and plan earnings. And each is treated differently for tax purposes.

Refunds of contributions (ROCs)

Since you already paid tax on your original contributions (RESP contributions are not tax-deductible), you can withdraw from this pool at any time tax-free. These withdrawals are referred to as refunds of contributions (ROCs).

Educational assistance payments (EAPs)

Meanwhile, any funds accumulated due to grants or plan earnings are taxable to the student when paid out. These withdrawals are referred to as educational assistance payments (EAPs).

Generally, lower-income students will choose to withdraw from the EAP pool first until the funds are gone. Although EAP amounts must be claimed as income, a lower-income student will likely pay little or no tax.

Higher-income students may be better off withdrawing from the pool of original capital invested as these funds are not taxable.

Need Advice?

Depending on your situation, RESP withdrawals can get complicated. For help tailoring a tax-smart strategy to fit your specific needs, we encourage you to contact us to arrange a no-obligation meeting.

Get started by using our RESP calculator to estimate how much you’ll need to save to afford your children’s post-secondary education.

Benefits of An RESP

Benefits of An RESP

October 2022

As a parent, you want to open every door for your children and fully support them in pursuing their future education and career goals.

But whether they choose to enroll in college, university or trade school, the cost of post-secondary schooling is expensive and trending higher. This is where a Registered Education Savings Plan (RESP) comes in.

An RESP combines tax-deferred investment growth and government grants to help you save for your child’s post-secondary schooling.

Flexibility

RESPs are highly flexible, allowing you to decide when and how much to contribute within the lifetime contribution limit of $50,000 per child. You also decide how to invest your funds.

Moreover, you can use your RESP savings for a variety of expenses related to your child’s post-secondary education, including tuition, housing and many other costs.

Government grants

Another huge advantage to opening an RESP is that, through the Canada Education Savings Grant (CESG), the federal government matches 20% of your RESP contributions, up to $500 each year to a lifetime limit of $7,200 per beneficiary.

In addition, through the Canada Learning Bond (CLB), children in lower-income families can qualify to receive up to $2,000 paid by the government into their RESP.

So if you’re dreaming of starting your child off on the right foot – whether that be towards the goal of being a doctor, carpenter, lawyer or whatever – open up an RESP today, invest regularly and see how quickly your child’s educational savings can grow.

Getting Started

Get started by using our RESP calculator to estimate how much you’ll need to save to afford your children’s post-secondary education.

If you have any questions, send us an email and we would be pleased to help.

Maclean’s 2022 University Rankings

Maclean’s 2022 University Rankings

October 2022

Deciding where to go for post-secondary schooling can be a significant challenge.

Fortunately for Canadian students and their parents, there are a number of helpful guides to Canadian universities and colleges, the most prominent being Maclean’s University Rankings, published annually by Maclean’s magazine.

If you have kids in high school and are starting to think about post-secondary options, we encourage you to visit macleans.ca/hub/education-rankings.

Rigorous ranking methodology

More than 19,000 university students responded to the magazine’s 2022 online survey, giving their opinions on professors and staff, residence life, and opportunities for extracurricular activities and experiential education, such as co-op programs.

Maclean’s applies a rigorous ranking methodology to offer a picture of the best Canadian universities in 10 program areas.

The rankings allow you to compare schools and programs based on overall scores as well as specific factors such as student satisfaction and school reputation.

For students interested in pursuing their higher education in Ontario, another good information source is ontariouniversitiesinfo.ca.

This online guide, known in short as OUInfo, provides comprehensive details about programs of study, admission requirements, fees, scholarships and more.

Preparing College-Bound Kids for Credit Card Debt

Preparing College-Bound Kids for Credit Card Debt

October 2022

It happens so fast. One day, tiny fingers are tugging at your pant leg. The next, college acceptance letters are arriving in the mail.

In between, you worked hard to impart life’s important lessons, but can you be sure your young scholar is ready to manage a credit card?

The reality is, college and university students are often short on cash and easily fall into spending more on credit than they should. Meanwhile, credit card companies are eager to issue cards to students, frequently sweetening their offers with sign-up freebies and other rewards.

So before packing the car with school supplies, be certain your child understands the crucial facts about credit cards, including:

Credit cards charge interest

While a credit card can initially seem like free money, interest adds up, and the balance must eventually be paid down.

Not all debt is equal

It’s essential to understand how interest rates work and the risks associated with different loan types.

Credit scores matter

How students manage their credit cards can affect their credit scores for years to come

Make no mistake, debt can be hard to pay off. Students need to understand that poor financial choices made during their post-secondary school years can follow them long after graduation.

Need Advice?

If you have any questions about student credit card debt or other forms of debt you are dealing with, send us an email and we would be pleased to help.

The Power of an RESP

The Power of an RESP

October 2023

For parents, grandparents, extended family and other interested parties, opening a Registered Education Savings Plan (RESP) can be a significant step towards securing a child’s academic future.

Why invest in an RESP?

RESPs are a smart choice for two key reasons: tax-advantaged savings and potential government grants. While contributions to an RESP are not tax deductible, the earnings are tax-deferred.

If your child qualifies, the Canadian Education Savings Grant (CESG) will match 20% of the first $2,500 you contribute each year. That’s an additional $500 per annum, up to a lifetime maximum of $7,200.

In the event you’ve delayed starting an RESP or haven’t been able to contribute enough some years to get the maximum grant amount, the carry-forward option allows you to double up on contributions to help you catch up on missed grant money.

And let’s not forget: the lifetime contribution limit for an RESP is a generous $50,000.

Flexibility

RESPs are highly flexible, allowing you to decide when and how much to contribute to your plan based on your financial situation. Additionally, RESPs can hold a broad range of investment products, and you get to determine how your funds are invested.

When it comes to using your RESP savings, these funds can be used not only for tuition, but also for housing, books, tools, transportation and other associated expenses.

Finally, upon withdrawal, the funds are considered your child’s income, not yours. Since most students fall within a lower tax bracket, this means there may be little to no tax owed.

Remember: the sooner you start, the more opportunity your money has to grow.

Getting Started

Get started by using our RESP calculator to estimate how much you’ll need to save to afford your children’s post-secondary education.

If you have any questions, send us an email and we would be pleased to help.

Prepare Your Kids to be Successful with Money

Prepare Your Kids to be Successful with Money

October 2023

From earning and saving to budgeting and investing, there’s much to learn about money. In fact, mastering money management is a lifelong learning process, and it’s best nurtured from an early age. Here’s a breakdown, based on age, of the key financial lessons kids are ready to absorb and put into practice.

Age 0 to 6

These little ones are observant. Whether you realize it or not, they’re likely becoming aware of your spending habits. So it’s a good idea to start involving them in your weekly shopping routines. By discussing your decisions about what to buy and what constitutes a reasonable price, you are setting a positive example for them. Consider giving your children an allowance and letting them to make their own money mistakes (and good decisions!) as this will help them develop a basic understanding of money. Engaging in activities like playing “store” can also be a fun and educational way for children to learn about money.

Age 7 to 12

At this age, kids are eager to learn and ready for more independence, while still valuing the guidance and support of their parents. One way to make the most of this age group’s eagerness to learn is by discussing your own spending habits. Even simple moments, like a trip through a drive-thru, can become valuable teaching opportunities. By explaining what you’re willing to pay for fast food and why, you can help kids understand the reasons behind budgeting and making informed spending decisions.

In addition to budgeting, it’s crucial to introduce the idea of saving. By teaching kids about setting small goals and working towards them, you can instill a sense of financial responsibility early on. Consider opening a bank account for your child and introducing the idea of saving towards goals. This not only provides practical experience managing money but also helps develop a long-term mindset towards saving.

Age 13 to 17

The teen years bring increasing responsibility and, frequently, the first chance for your child to earn money through part-time work. This is a great time to introduce the concepts of gross and net income as well as saving strategies for short- and long-term goals. Whether it’s around saving up for a school trip, purchasing a car or making contributions to a post-secondary education fund, there should be ample opportunity for you to impart valuable lessons that will last a lifetime. It’s also a good age to discuss the responsibilities of owning a credit card and taking on debt.

Age 18 and older

As your kids approach adulthood, they must prepare to face the realities of the real world. It’s important to ensure they have a solid understanding of financial responsibility, including the value of money and the ability to effectively manage a savings account. This is also the time to have open conversations about other key aspects of personal finance, like budgeting, education costs, student debt, and credit ratings. By discussing these topics with them, you can provide them with the necessary knowledge and tools to navigate the financial challenges they may encounter as they embark on their own journeys.

A financial education is a lifelong process that begins at a young age. With proper guidance, your child will leave the nest confident and ready to navigate the financial world.

Need Advice?

If you have any questions, send us an email and we would be pleased to help.

Inflation Crunches Today's Post-Secondary Students

Inflation Crunches Today's Post-Secondary Students

October 2023

Post-secondary students are feeling the financial squeeze of rising inflation, with significantly more saying they will be relying on their parents for a place to live and the funds to complete their schooling, according to the RBC 2023 Post-Secondary Students & Financial Readiness Poll.

The survey, conducted by Ipsos, contrasted the poll responses of post-secondary students in 2013 and 2023. It found that almost half (47%) indicated they would be living with their parents this school year, compared to 36% 10 years ago.

Increased dependence on parental assistance

In addition, the survey findings underlined the greatly increased dependence of today’s post-secondary students on their parents’ money, with 43% assuming their parents will take care of their financial needs, compared to only 29% in 2013.

A substantial percentage of poll respondents were also contemplating ways to improve their financial well-being during their post-secondary education, including:

  • Working part-time while going to school (49%)
  • Reducing non-essential expenses (47%)
  • Preparing a budget and sticking to it (45%)
  • Regularly monitoring where money is spent (45%)
  • Carefully avoiding debt (40%)
  • Looking for student discounts everywhere they shop (40%)
  • Paying with cash or debit wherever possible (25%)

Similarly, in looking to the future, today’s post-secondary students are considering ways to keep expenses down after graduation by delaying some of their major life goals. For example, while more of these students indicated they plan to buy a home after they graduate (83% in 2023 vs. 74% in 2013), more now will be delaying that purchase for five years or longer (43% vs. 25%).

Regardless of their cost-cutting efforts, 45% expect to graduate with up to $20,000 in debt – a big increase from 30% who expected to have the same amount of debt in 2013.

Getting Started

Get started by using our RESP calculator to estimate how much you’ll need to save to afford your children’s post-secondary education.

If you have any questions, send us an email and we would be pleased to help.

From Savings to Success: Planning RESP Withdrawals Wisely

From Savings to Success: Planning RESP Withdrawals Wisely

July 2024

The assistance you give your child by opening a Registered Education Savings Plan (RESP) shouldn't stop with your contributions. Providing sound guidance around withdrawing the funds can help your child minimize the tax consequences. Let's dig into RESPs and how they work from a tax perspective.

Understanding RESP components

RESPs consist of your contributions to the account, grants deposited through the Canada Education Savings Grant (CESG) and Canada Learning Bond (CLB), and earnings generated through interest, dividends and capital gains.

For tax purposes, the money in the account is divided into two distinct pools: One pool consists solely of the contributions. The other pool consists of the funds accumulated through grants and earnings.

At withdrawal, the Canada Revenue Agency (CRA) treats the two pools differently, which is why you need a strategy for minimizing the tax implications.

Understanding the types of RESP withdrawals

Post-Secondary Education (PSEs)

Withdrawn from the subscriber contributions. PSE withdrawals are not subject to tax because the contributions were made with after-tax dollars. ROC withdrawals can be made at any time for any purpose.

Educational Assistance Payments (EAPs)

Withdrawn from the grants and earnings. EAPs are intended to cover education-related expenses like tuition, textbooks and living costs. Beware that EAPs are taxable in the hands of the beneficiary. However, since students often fall into a lower tax bracket, the tax impact is typically minimal (more on this later).

For full-time students, EAP withdrawals are limited to $8,000 in the first 13 weeks of enrollment. For part-time students, EAP withdrawals are limited to $4,000 in any 13-week period of enrollment. In both cases, after the 13 weeks have passed, any amount of EAP can be withdrawn

Suppose a child is named the beneficiary of more than one RESP. In this case, beware that the government's EAP withdrawal limits apply to the beneficiary. Hence, the total withdrawals across all the RESPs must fall within the EAP withdrawal limits. Coordinating withdrawals with the other plan holders is advisable to ensure the EAP withdrawal limit is not exceeded.

Timing withdrawals

Timing plays a crucial role in minimizing potential income tax. Here are a few strategies to consider:
Generally, lower-income students should withdraw from the EAP pool first until it is depleted. Although EAP amounts must be claimed as income, a lower-income student will likely pay little or no tax due to their lower tax bracket.

For higher-income students, it may be advantageous to initially withdraw from the non-taxable PSE pool. This helps to avoid additional tax burdens while the student is in school. By deferring EAP withdrawals until the later school years or after graduation, higher-income students can potentially manage their tax liability more effectively, especially once they are working and likely to be better off financially.

Graduates can make EAP withdrawals for up to six months after finishing their qualifying education program.

Need Advice

If you have questions about RESP withdrawals, send us an email and we would be pleased to help.

If you're getting started planning for your child's post-secondary education, we encourage you to use our RESP calculator to estimate how much you’ll need to save.

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Need Advice?

Are you reviewing your investment plan or financial plan for retirement? We encourage you to contact us to arrange a no-obligation meeting to discuss your options.

Need Advice?

Are you reviewing your education savings plan? We encourage you to contact us to arrange a no-obligation meeting to discuss your options.

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