These days, we have to keep a closer watch on our money. No one can afford to randomly invest in the future of without really understanding what they're getting into, especially if its our children's college money we're playing with. Losing it all could mean our kids don't get the education they want or they must rack up massive debts to go to university. To prevent that from happening and learn to invest your child's college fund wisely, research the RESP. You can start here.
RESP stands for Registered Education Savings Plan and it's an initiative by the Canadian government to create a safe way of investing the money you put aside for your child's education. Putting the money you save for your child into this type of account will also qualify you for the Canada Education Savings Grant and the Canada Learning Bond, which you can add to the money you've saved for your child's education.
Signing up for one is easy, all you have to do is get a Social Identification Number for your child and open a designated RESP account in your child's name. You can open an RESP for a child if you're the child's parent, family member, or even if you're just a family friend. Remember, though. This money will be tied up in the future student's behalf and cannot be withdrawn to go on vacation, so think very carefully about how much you will contribute to the RESP.
RESPs are all different, since each is managed by the bank that offers it. Therefore, you need to think beyond which banks are close to your home when you're choosing a provider. You need to think about whether there are service fees, requirements for minimum or regular payments, whether the account can be transferred to another person, what happens if the child opts not to go to school, and whether it's possible to withdraw money early.
RESPs can only be used to pay for an educational program that qualifies under the rules of the savings plan. Generally this means 10 hours of study per week or more over a period of three weeks. Therefore your child's post secondary education choices may be limited if he or she wants use an RESP for tuition. Exceptions may be made for students on an individual basis, such as if your child was undergoing Autism treatment and couldn't study enough hours per week.