RESP, Explained - Everything You Need To Know About The Education Savings Account For Beginners
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- Опубліковано 25 лип 2024
- The registered education savings plan (RESP) is a registered investment account in Canada that lets you invest money for a kid's post-secondary education. It allows you to grow tax free gains until the kid is enrolled in school, where the income earned is taxed at the kid's rate (so lower than yours!). Basically, it exists to incentivize people to put away money for education, and by the end of this video you'll know everything you need to know about the RESP.
Check out the CDIC website for more information about deposit protection and RESPs - www.cdic.ca/
0:00 What is an RESP?
0:45 Benefit 1: The RESP is an investment account
2:44 Benefit 2, Part 1: Canadian Education Savings Grant
5:08 Benefit 2, Part 2: Canada Learning Bond
7:32 What's the RESP contribution limit?
9:34 How to maximize the government contributions
10:57 Withdrawing money from your RESP
12:41 What if the kid never goes to school?
13:51 How CDIC protects your deposits
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Disclaimer - This content is for education and entertainment purposes only. Steph & Den do not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.
Do you have any questions about CDIC protection of deposits held in a RESP? Ask away below! ⬇
I wish the people at the bank explained RESP's as good as the two of you. Thank you for another great video!
Thanks so much 😊
Great explanation. When I signed up for my kids RESP, the bank couldn’t answer basic questions. I had to Google my questions.
I work at bank and can confirm these guys did amazing job explaining RESP. 🎉
Thank you! 😊
@Steph & Den This was a really impressive video, well researched and presented. The amount of extensive information that you backed into a 16mins video, was very clever. This is a must watch for any student and/or Parent. Maybe you should do a Part 2 in the future.
You should do a seminar on this, there are lots of people that could really benefit from understanding how the program works.
Cheers!!
Thanks so much! We appreciate it 😊
Thanks so much. How infomitive!! 😊
Another video complete. Thanks for the information ❤️❤️
Thanks for watching! 🙏🏿🙏🏻
wow thanks for making such an informative video!
Thanks for watching! 😊
THanks for sharing! Awesome info!
Thank you for watching! 😊
Excellent presentation, Thanks to both of you.
Thank you so much 😊
Very informative and well researched
Thank you! 😊
Great video! Can't wait to see part 2 on group RESPs 😀
Thanks, Kimberley! 😊
Great intro to RESP’s. I remember being really frustrated that Wealth Simple wouldn’t allow me to open a direct investing resp, I had to use their advisor service which used a target date and forced me into an asset allocation. I can change it but I can’t just buy ETF’s in it. Also, I find it interesting that the CDIC is expanding to RESP’s when it sounds like they only really cover cash (personal accounts, etc.) and GIC’s. With an resp, are we not more likely to have investments like stocks, bonds, and ETF’s?
Excellent video on a topic that is often not well understood.
For those who are concerned about playing catch up and were alarmed by the example at 10:50, contributing a maximum of 5,000 yearly would do the trick. If you need to catch up, there is no benefit contributing more than 5,000 as far as maximizing the basic grant is concerned.
In the example from the video, you miss out on a potential 500 grant by contributing 7,500.
If you just catch up with 5k each year you won't miss any grant.
Again excellent work Steph & Den. Knowing the information is one thing, but putting it together on this platform and explaining so simply is something you are doing very well! Keep it up.
Thanks so much for watching & your comment! 😊
Thanks for above comment, So will it be possible for my son born in 2013 and I open RESP account this year 2023, How do I claim all missed year to claim government grant?
thanks for the video guys! just wondering, what happened to the weekly quick takes videos? will you guys start them up again, i loved watching them!
Thanks, Alwin! We've stopped doing those for now, but so glad you liked them 😊
Very clear 👌
Thank you! 😊
Thanks for the video. Few questions:
There's the "obvious" programs where RESP's are eligible (university, college etc.). Are there others ones that are eligible but not obvious? Flight school? Sailing school? Private colleges?
Does it apply to foreign schools or Canadian only?
Do bursaries/scholarships affect RESPs? How about part-time jobs while in school?
Thanks!
Excellent video.
Thank you! 😊
Can you make a video on Life Insurance? People says it’s investment vehicle. I want to know why insurance companies have poor review ratings. I also want to know the pros and cons of life insurance.
Great content for free wow. Folks please finish watching the ads to support them.
Thank you so much! 😊
10:40, correct me if I'm wrong but I think you CAN retrieve that lost CESG if you forgot to contribute two years.
For example, let's say...
year 1 Contribute 2500, receive 500 CESG
year 2 Contribute 0, receive 0
year 3 contribute 0 receive 0
Year 4 contribute 5000, receive 500+500 (from year 3)
year 5 contribute 5000, receive 500+500 (from year 2)
Edit: what I wrote was wrong, I removed The incorrect info.
I thought you could go back and max the amount for every missed year. For example if it’s a child age 10
Year 1: you put 5000 get 1000
Year 2: put 5000 get 1000
Year 3: same
Year 4 same
All the way until you catch up, please advise?
@@taniasandhu8828 After looking into it more it seems that you are correct, at least according to wealthsimple. You can receive the CESG grant for previous missed years, but only one year at a time. So if you missed the grant from ages 0-10 you can double up payments for the next 7 years to recoup most of the lost grant money.
What would happen if the kids become non resident midway into RESP, for example?
So if I understand correctly, you can withdraw the income earned and place it into your rrsp account if they do not go to school. This will avoid any tax implications with the income earned?
Hey Steph, I have a question regarding withdrawal of money from RRSP. Last month I invested some of my money into RRSP account. I have already filled my tax return for year 2021 before I invested those money. So, right now I don’t have deferred any of my tax with my RRSP money. So, my question is can I withdraw that money from RRSP hence I don’t have made any tax file on that money?
Can we have two RESP accounts under two financial institutions?
Hi guys, great video! One question, does this only apply if they want to go to a Canadian school? Or can it be outside the country? Thank you
You should be able to use your RESP money for schools outside of Canada, too 😊
Great video.
So if I contribute $0 for 2 years the 1st years $500 cesg is definitely gone?
Can I not contribute $5000 in the following 2 years to get whole $1000 cegs?
Thanks in advance
Can individuals(adults) apply for RESP and get the same benefit? And, is it possible to apply again when I have kids or is it only one chance to have a benefit?
Steph & Den thanks for the video!!!!! I really want to know if I can Move my RESP from the bank to an online broker?
Yes you can
If you have multiple children do you open up three different ones?
What’s the downside of holding US stocks in RESP
Good job! STEP &DEN is abrand for investment education
🙏🏿🙏🏻 thank you!
Thx for the video. Quick Q - my kids had RESPs since born but only half of CESG was claimed. I want to now max the CESG but there's only 5 more yrs until 17 yrs old. Shall I still invest in Questtrade ETFs at this point? Or shall I stick with GICs at 4.2 % per year?
Thanks for watching! Good question - we're glad that you're going to get more of the CESG over the next few years. The biggest thing to keep in mind is that if you're going to start using the money in this account within the next 5 years, that's a somewhat short-term period - you'd want to consider how risky you want to be (with ETFs, you have the potential to gain more or lose more than the locked in 4.2% GIC). Hope that helps 😊
Thank you guys! I may go the safe way ( GICs) with my kids RESPs, as it is a very fixed time frame, unlike my RRSPs....Keep up the good work!!!
Will the government match the max $7,200 if you put 50k in the account in year 1?
Question: my son born in 2013 and I open RESP account this year 2023, How do I claim all missed year to claim government grant?
You can't. You can get 8 x $500 CESG payments + 1 retro payment. Assuming you contribute $5000 this year and $2500/year until your son is 18.
The RESP limit should be adjusted to inflation.
10:41 This is incorrect, you can catch up on multiple missed years, but only one year at a time. I.e. contribute $5k per year for each missed year.
I have taken a RESP plan for my two year old son from iA financial group. Now I hearing that their charges when withdrawing the money is high . How can i know about the reality?
It might be a good idea to reconsider the RESP plan with them. The earlier you get out, despite the cancelation fee, the better off you’ll be long term.
They’ve been known to have predatory practices and really poor financial products. I would recommend you do a bit more research on your specific plan and how much it’ll cost to get out. It’s much better to open an RESP with your regular bank than an insurance company. Let us know how it goes and hope that this helps. 😊
Thanks for the reply. We are thinking of changing our plan to IG wealth management. Whats your opinion on that?
IG Wealth Management is very similar. If you do quick search for reviews, there a ton of people with complaints on high fees and lack of transparency.
There are alternatives, similar to what we explain in our other investing videos. For example, Wealthsimple offers a low fee robo-advisor or you could go the self directed approach. Let us know if you that makes sense - we also plan to share more detailed info in one of our upcoming newsletters. 😊
Tax free gains ? 50k maximum and Government Free money $7200 - so you are saying for 18 years you Invest and make only $7200 return? Because which bank or any investment companies gives rate on return that is worth for 18 years? Most banks only give ROR less than 3% !!!
Does it make sense ?
Why do
You keep saying $2500 per month
9 min 40 sec " optimal to put in $2500/month for the first 14 years? " please check your math prior to posting. I think you meant annually. Just some constructive criticism.
It states exactly what you wrote here on screen at 9:40 as this is being said - in the top left hand corner 😊 *$2,500 per year NOT month