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Kyle Prevost, creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course, shares financial headlines and offers context for Canadian investors. Disney is back on track Even with all the iconic brands under its corporate umbrella, Disney has struggled the last few .... More »
If you’ve been checking out GICs lately, it’s likely because of the record gains from recent interest rate hikes. Interest rates for guaranteed investment certificates have steadily increased as the Bank of Canada (BoC) has raised its benchmark rate over the past year and a half. At some financi.... More »
Live news: BlackBerry names new CEO, calls off Internet of Things IPO Financial PostBlackBerry names new CEO, calls off plans for IPO of Internet of Things business Yahoo Canada FinanceBlackBerry names new CEO as company ditches connected-car IPO - but still plans to split in t.... More »
Overview Top 100 Dividend Stocks Past Performance Methodology It has been a lousy couple of years for dividend inv.... More »
As many Canadian parents and grandparents know, a registered education savings plan (RESP) is a powerful savings tool. Although you can create a college or university fund for your child in other ways, such as a bank account or a tax-free savings account (TFSA), they don’t offer the same valuable government grants that an RESP does. It’s designed to encourage families to save, and the only way to get those grants is to make contributions. In addition, an RESP can hold the same types of investments as TFSAs and other registered accounts, and any investment growth in an RESP—including interest, dividends, and capital gains—is tax-deferred until it is withdrawn. (And when it is, it will be taxed in the hands of the plan’s beneficiary—your child, who will likely pay little to no tax.)
Once you’ve opened an RESP for your (grand)child or (grand)children, though, what should you do with it?
How often and how much to contribute to an RESP
Ideally, you should contribute at least $2,500 per year, if possible…