Every parent hopes for and dreams of the day their child goes to college. However, what many aren’t looking for is the large checks that have to be written in order to make that happen. Starting a Heritage RESP Plan can be a great way to start saving money as early as you want. Since you’re allowed to put whatever you want into the account as time goes on, you’ll be able to contribute whatever you can each particular month, year after year. You’ll be amazed at just how quickly those small contributions can add up. Here are a few of the different ways in which opening an RESP can work to the advantage of you and your family starting today.
1. Have the Funding You Need When You Need It
The main problem many parents face when it comes to saving up for their child’s post-secondary education is constantly tapping into the funds they’ve been trying to accumulate. Starting a Heritage RESP will give you a secure location to place your money so that you can contribute to it whenever you can and rest easy knowing that you’ll have access to it when you need it. Stop being tempted to use that money to pay for other needs. Your child’s education is a priority and needs to be treated that way from an early age.
2. Tax Sheltered Growth
It’s true that your contributions won’t be tax-deductible, meaning you can’t use it to reduce your taxable income, but all the investment income that’s generated whilst in the Registered Education Savings Plan is tax sheltered for all the time it’s kept within the plan. This means that all the capital you invest into the plan, regardless of where it’s from, can grow tax-free. This is an incredible benefit for many parents, as this amount of money could result in tremendous amounts of taxable interest later on down the road if left in standard accounts.
3. Tax Benefits Later On
While the parents will have to pay their income taxes at the moment, they won’t have to pay taxes again when the money is taken out of the account. This responsibility will most generally fall onto the shoulders of the recipient, your child. However, because of certain tax laws, the majority of these recipients will be exempt from paying these taxes, particularly if they have no other source of stable income.
4. Government Grants
In order to encourage people to open up an registered education savings plan, the government offers incentives in the form of a wide range of different grants, some of which will offer you up to 20% for every dollar you invest in an RESP. Depending on your current financial situation, there are many different grant opportunities available for you to take advantage of, so make sure you find out where you may qualify today.
Saving up for your child’s future is an important priority. Make sure you’re giving them the best start to their adult life by investing in their post-secondary education from an early age.