Due to the high cost of post-secondary education, many Canadian families enroll their children in a Registered Education Savings Plan (RESP). It is helpful to begin saving early so that they have a head start when it comes time to attend university, college, or a skills-training program. But
what is an RESP? How does it work? The RESP is a long-term investment strategy designed to help family members and friends contribute to a child's education. Investing in this account is tax-free. You may even be eligible for government contributions, such as the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) - free money towards your child's education. A contribution to the RESP is made by the sponsor, usually the child's parent or guardian. The government contributes 20% of that amount, up to a maximum contribution of $2500 per year. If you contribute the maximum amount, you will receive $500 per year in free money. Known as the Canadian Education Savings Grant (CESG), this government grant is deposited directly into the beneficiary's RESP and is yours to invest as you see fit.
