1. Are there rules about how much I can save each year?
Some plans have strict rules. For example, you may have to put in at least $500 when you sign up. Registered Education Savings Plans (RESPs) may limit how much you can save for each child. The government adds to what you save with free education grants.
2. When do I contribute?
In many cases, this is your choice. With some RESPs, there’s a set schedule. Find out before you join.
Tip: If your income goes up and down a lot, or if you are worried you may miss a payment or two, watch out for plans with strict rules. If you will have a larger lump sum to invest sometimes, make sure your plan lets you do that.
3. Who will invest my money?
With some plans, you have to choose investments. Make sure you like the options you have. If you worry about making mistakes, choose a plan that offers very safe investments. Or, choose a plan where an expert will invest your money for you. You will likely pay for this service, but you may enjoy the peace of mind.
4. How fast will my money grow?
It depends on how you invest. If you put your money in a savings account, you know what you’ll make, but your money won’t grow very fast. With investments like stocks, your savings may grow faster, but you could also lose money.
Tip: Salespeople may show you how much money an investment made in the past to impress you. Keep in mind that most investments have good years and bad years.
5. How much will this plan cost?
With some plans, you pay only what it costs to invest. For example, you may pay fees each time you buy and sell stocks. Investments such as Guaranteed Investment Certificates and Canada Savings Bonds have the lowest costs.
Some plans charge you fees to join. You may also pay fees each year you stay in the plan. Your costs will likely be higher if there is an expert in charge.
6. What happens if my plans change?
With some plans, you may not get all your money back if you leave early. Others are less strict. So, decide if it’s important to have options if things change. For some people, it’s not a concern, because they care more about other things the plan offers. For others, it’s very important.
Remember: There are lots of ways to save for a child’s education
The main thing is to find one that will work well for you now and over the years.
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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.
