Investment picks and other strategies for maximizing RESPs

Getting the maximum grants requires $2,500 in annual and $36,000 in total contributions. Another $14,000 can be invested in the RESP without matching grants to reach the $50,000 contribution limit.Building a nest egg for post-secondary schooling can be challenging for parents as tuition and living expenses creep higher. Although a tax-sheltered registered education savings plan is a popular way to build assets for higher education, investment strategies can differ among financial advisors.

Getting the maximum grants requires $2,500 in annual and $36,000 in total contributions. Another $14,000 can be invested in the RESP without matching grants to reach the $50,000 contribution limit. One strategy he uses is called “super-funding” the RESP. In a baby’s first year, parents can contribute $2,500 to get the grant as well as a lump sum of $14,000, he says. “Each year after, they make the $2,500 matching contribution .”

A strategy to reduce that tab, he says, could be a mix of taxable withdrawals stemming from grants and investment growth, and non-taxable withdrawals from contributions. “I usually don’t tell people to put more money into an RESP than what’s required for the maximum grant,” Mr. Ferrier says, and how it’s invested will depend on their risk appetite.“I favour bank stocks because, historically speaking, their returns tend to be more predictable and their dividends don’t get cut,” he says. “They have demonstrated a history of growth.”

The note can be sold but otherwise it “steps up” yearly with an interest rate increase – unless it beats a certain hurdle and is called by the bank. For example, Verecan Global Equity Fund holds securities such as Mawer Global Equity Fund, iShares MSCI Minimum Volatility Canada Index ETFVerecan’s Majestic Select Partners Global Income Fund holds fixed-income investments such as PIMCO Monthly Income Fund and BMO Aggregate Bond Index ETF

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Saudis Reform Investment Law in Bid to Attract Foreigners(Bloomberg) -- Saudi Arabia announced new business regulations aimed at boosting transparency and easing the process of investing in the kingdom as it looks ...
Source: YahooFinanceCA - 🏆 47. / 63 Read more »

Investment management industry needs wide review to prevent conflict of interestIn July the Globe reported that there was a potential conflict of interest by the founder of the brokerage firm Wellington-Altus
Source: globeandmail - 🏆 5. / 92 Read more »

Science North CEO excited about $3.2 million investment for new trades training facility for young peopleScience North opened its doors in June 1984. Today it is the second biggest science centre in Canada.
Source: CBCTBay - 🏆 42. / 63 Read more »

Goldman investment arm joins firms quitting major climate clubThe asset management unit of Goldman Sachs Group Inc. has walked away from the world’s biggest climate alliance for investors, marking the latest in a string of similar defections amid continued Republican Party attacks on green finance.
Source: BNNBloomberg - 🏆 83. / 50 Read more »