Making the most of your RESP: the hacks you need to know

Set it and forget it. Automate your contributions into the RESP by setting up a regular investment plan (RIP). This also allows your savings to start growing immediately.

Your range of education savings options include RESPs, tax-free savings accounts (TFSAs) and non-registered savings. Each plan type has advantages and limitations, so your approach should complement your family’s goals and financial situation.

RESPs are most often chosen because they’re eligible for incentives from the Canadian government and some provincial grants; however, they have that lifetime maximum of $50,000 per child. If your child’s education plan costs look like they may exceed that, you might want to prepare additional savings outside of the RESP. Here are some options:

• Use a non-registered account. This gives you maximum control and flexibility, with no limits on contributions or how the funds are used. But, unlike RESPs, investment income earned is taxed in the year it’s realized and there are no grants available.
• Use a TFSA. Earnings and withdrawals from a TFSA are normally tax-free, but government grants aren't available and you must adhere to the TFSA contribution limits.

The best combination of options depends on your child’s age, how long you’re saving for and your financial means. Work with your advisor for help determining the best strategy for your unique situation.

By investing $2,500 annually — that’s just $209 a month — into a RESP for at least 15 years, you can receive the maximum CESG of $500 annually before your child turns 18, with a lifetime maximum of $7,200 per child.