Registered Education Savings Plans (RESPs) come in all shapes and sizes. Some plans let you invest your savings on your own. Others invest your money for you. Some plans are for one child only. Others are for families.
There are two main types of RESPs:
- RESPs you buy through a financial institution (including a bank, mutual fund company, brokerage firm, or trust company). These RESPs work a lot like any other investment account.
- Scholarship plan RESPs, which you buy from scholarship trust companies. With these plans, you are part of a larger group of families who are also saving for their children's education.
Each type of plan works a little differently. Make sure you understand all the rules before you choose a plan. Some RESPs have strict rules about how much money you get back if you need to leave the plan for any reason.
Try our to help you estimate how much money you would need to put into an RESP account each year to cover education costs.
Tip: With all RESPs, you can save up to $2,500 each year per child and get a government grant. If you save more, there is no grant on this extra amount. What if you can't save $2,500 in one year? If you can make it up another year, you will get the remainder of the government grant for that year.
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Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.