Reducing risk in an RESP: How to invest as your kid approaches college or university + MORE Oct 5th

RRSP contribution deadline highlights
The RRSP contribution deadline for 2023 is midnight, 11:59 PM ET, on Feb. 29, 2024. Contributions made before the deadline must be reported on your 2023 tax return, but you can choose to carry the deductions forward into 2024 or beyond.

Every year, Canadians are asked to prepare an income tax return for the previous tax year. Most of the time, the tax year and calendar year align perfectly, meaning you’ll file a return in 2024 based on income you earned and deductions you qualified for between January 1 and December 31, 2023.

There’s one well-known exception to this rule: With registered retirement savings plans (RRSPs), Canadians have 60 days after the end of the calendar year to make contributions for the previous tax year. This means you have until midnight, 11:59 PM ET, on February 29, 2024, to make an RRSP contribution and lower your taxable income for the 2023 tax year.

What’s an RRSP? 

An RRSP is a registered savings account designed to help Canadians save for retirement…

In late September, Alberta Premier Danielle Smith opened a public online consultation on a proposal to withdraw the province from the Canada Pension Plan (CPP). Her announcement was tied to the release of a third-party report that claims, among other things, that Alberta is entitled to 53%, or $334 billion, of the plan’s total assets. Smith contends that Albertans could receive more and pay less with a provincial pension fund. 

Can Alberta leave the CPP? 

Yes. According to government documents obtained by Postmedia, the federal government would have difficulty blocking Alberta’s withdrawal from the CPP. Although the federal government is responsible for laws covering old age pensions and other benefits, it cannot overrule a provincial law on the same matter, the documents state.  

The Alberta government believes pulling out of the CPP could lead to $5 billion in savings for the province, which it says could be used to boost Alberta seniors’ pension benefits…

If you’ve opened a registered education savings plan (RESP) for your child or grandchild, congratulations. You’ve taken the first step towards financing their future college, university or trade school education. And now your family can start benefiting from generous government grants worth thousands of dollars. What you might not yet have figured out, though, is what assets to hold in the RESP—and how your investment mix should change as your child grows up.

Saving for post-secondary education can be a lot like saving for retirement

Often, an RESP subscriber (that’s you, the person who opened the account) can take cues from the advice typically given to people who are saving up for retirement. Factors to consider include:

Time horizon: How long you have to grow the funds before the first withdrawalRisk tolerance: Your comfort level with market volatilityBudget: How much money you can contribute towards your savings goalKnowledge and confidence: How comfortable you’ll be with managing the investments yourselfInvesting goals: What return on investment you need to meet your financial goal—including keeping up with inflationTaxes: Withdrawing funds from your account in the most tax-efficient way

Let’s look at each of these factors in more detail, and what investments could be a good fit at different stages in your RESP journey…