RESP or RSP or Others

[desmond]

If I have 10 thousand to spare, should I put in RESP, RSP, Mutual Funds or Term Deposits or other investments?

My profile:
Married with 1 kid and another 1 coming soon.

Thanks

[97'Scort]

If you haven't already, then setting up RESP's for the kids is best done early. Just my opinion, but college is expensive.

[ExtraSlow]

Another good thing about the RESP is that the government gives you grants when you set it up. I think up to $1000 if you put in $2500.
Something like that.
http://www.heritageresp.com/content....&LangType=1033
http://www.advancededucation.gov.ab....ding/aces.aspx
I'm learning about that this year due to the birth of our daughter.

IMO, low risk income producing investments are best for RESP. Heavy on the bonds.

[Ntense_SpecV]

More info - as the links above are for 2008 - I have the numbers from 2009.

CESG - Canada Education Savings Grants
Basic entitlement:
* Matches 20% of subscriber annual contributions
* basic annual room $500, with carryforward of unused room
* Maximum annual grant including carryforward of $1000
* Lifetime maximum $7200

Additional Entitlement
* If family net income (FNI) is less than 32,832, extra 20% on first $500 contribution, OR
* If FNI is between $38,832 and $77,664, an extra 10% on first $500 contribution


CLB - Canada Learning Bond
* For a child whose primary caregiver is entitled to the National Child Benefit (NCB) supplement
* No personal contributions required
* For children born after 2003, $500 deposited direct to RESP for the first year of eligbility
* Annual $100 payment so long as NCBs qualification continues, up to year beneficiary attains age 15

ACES - Alberta Centenial education Savings Grant
* Alberta resident child born after 2004
* Base $500 grant available once child has SIN and RESP opened
* Apply for $100 grant for a child (who is student) turning 8, 11 or 14 after 2004 - must be attending an alberta school, and a minimum $100 contribution in 12 months prior to applying.


Potential CESG, CLB by 2009 family income

Up to $38,832
CESG
Basic - $500
Additional - $100
CLB
Initial - $500
/Annual - $100
Total Potential - $1100, $700

$38,832 to $40,726
CESG
Basic - $500
Additional - $50
CLB
Initial - $500
/Annual - $100
Total Potential - $1050, $650

$40,726 to $77,664
CESG
Basic - $500
Additional - $50
CLB
Initial – N/A
/Annual -
Total Potential - $550

Over $77,664
CESG
Basic - $500
Additional – N/A
CLB
Initial – N/A
/Annual -
Total Potential - $500

[Bondar]

Original Post Removed. (Please read the Forum Rules and Terms of Use before posting again, or risk getting banned).

[Xtrema]

Originally posted by desmond
If I have 10 thousand to spare, should I put in RESP, RSP, Mutual Funds or Term Deposits or other investments?

My profile:
Married with 1 kid and another 1 coming soon.

Thanks

RESP and RRSP are tax sheltered portfolios.

Mutual Fund, GIC, Term Deposits are investment products you can buy under those portfolios.

RESP would be the best bang for the bucks. You get tax return + government matching. RRSP would be the next. There are more complicated withdrawal rules against RESP vs RRSP.

[lint]

Originally posted by Xtrema
RESP and RRSP are tax sheltered portfolios.

Mutual Fund, GIC, Term Deposits are investment products you can buy under those portfolios.

RESP would be the best bang for the bucks. You get tax return + government matching. RRSP would be the next. There are more complicated withdrawal rules against RESP vs RRSP.

Incorrect. RESP contributions are made with after tax dollars. The advantage is the government grant and that the gains are taxed in the hands of the recipient not the contributor.

[skandalouz_08]

I'd max out the RESP contribution for the kid in a family plan. That way if 1 child doesn't pursue post secondary the other child can still use it.

Put the rest of the money into an RRSP provided you have contribution room and hopefully you'll get a nice tax refund come tax time. At which time, use that money to reinvest into an RRSP or RESP.

Hard to say how much benefit you will get from your RSP depending on your tax bracket and many other factors, but that's what I would suggest.

[dezmarez]

Figured I would bump an RESP thread....

Alberta Government is closing the ACES.

ACES - Alberta Centenial education Savings Grant
* Alberta resident child born after 2004
* Base $500 grant available once child has SIN and RESP opened
* Apply for $100 grant for a child (who is student) turning 8, 11 or 14 after 2004 - must be attending an alberta school, and a minimum $100 contribution in 12 months prior to applying.

Updated information:

March 31, 2015 is the last eligibility date for ACES plan grants:
Children born after March 31, 2015 will be not eligible for the $500 grant.
Children who turn 8, 11 or 14 years of age after March 31, 2015 will not be eligible for the subsequent $100 grants.

[Khyron]

Ugh - was a good way to get parents to go through the hassle of setting up an RESP. Can't imagine the 500/kid was that onerous an expense.

My 7 year old's account is like 15K in one of the balanced/aggressive index funds. We put in 50 a month.

[Zero102]

That sucks - we got the $500 for each of our 3 kids but we won't get any of the subsequent amounts for them.