How to get the biggest bang for your buck from your RESP

Eric Hadley and Alex Taman opened an RESP account for their 9-month-old daughter, Molly, in 2010. Contributing as soon as possible can reap significant financial rewards down the road.

Eric Hadley and Alex Taman opened an RESP account for their 9-month-old daughter, Molly, in 2010. Contributing as soon as possible can reap significant financial rewards down the road.

It seems like everywhere you look these days, there’s a back-to-school sale. Frankly, I’m somewhat skeptical as to whether returning students actually need a new home-theatre system to succeed, but electronics retailer Best Buy, in an online ad, claims that “Studies show great sound improves GPA.”

What could help even more, in my opinion, is a well-funded education savings plan, ideally, in the form of a Registered Education Savings Plan. While RESPs have been around for many years, and really took off in 1998 with the introduction of the matching 20% Canada Education Savings Grants (CESGs), my experience is that parents are not using them in the most strategic or optimal manner possible.

Reblogged from The Financial Post | Jamie Golombeck

Here’s a quick overview of the basic rules and then we’ll run through a couple of optimization strategies.

The RESP is a tax-deferred savings plan that helps an individual, typically a parent, save for a child’s post-secondary education. Similar to other registered plans, the RESP is in essence a wrapper in which you can hold various eligible investment products, such as GICs, mutual funds and even individual stocks and bonds. Unlike RRSPs, contributions to an RESP are not tax-deductible nor are they taxable when withdrawn.

 The main benefit of the RESP is the ability to have all earnings (capital gains, dividends and interest) on the investments inside the RESP accumulate tax-free until withdrawn. When the funds are paid out, they are included in the student’s income but presumably the child will be in a low- or zero-tax bracket, on account of the various tax credits available to them (including, most commonly, the basic personal amount and tuition, education and textbook amounts) that little, if any, tax will ever be paid on the earnings when withdrawn.

The other benefit is the CESG, equal to 20% of the annual contributions, to a maximum of $500 (or $1,000 if there is unused grant room from previous years). The maximum CESG entitlement is capped at $7,200 per child.

When funding an RESP, the first missed opportunity is that parents often only start thinking about contributing to their kids’ RESPs several years after their children are born. But contributing to an RESP as soon as possible can reap significant financial rewards down the road.

For example, take Alan, who starts saving for his daughter Amy’s education the year she is born. If he contributes the $2,500 maximum amount needed each year to maximize the CESGs until he hits $36,000 of contributions in the year Amy turns 14, he will have accumulated nearly $61,000 in Amy’s RESP by the time she is 18, assuming a 3% rate of return.

Contrast this with Zoe, who only starts saving for her son Zack’s education when he turns 10 by contributing $1,000 in that year and then $5,000 each year from age 11 to 17 to catch up on all prior years’ CESGs. By the time Zack is 18, assuming the same 3% rate of return, Zack’s RESP would only be worth $49,000, despite Zoe having contributed the same $36,000 that Alan contributed.

Finally, for those parents who can afford to do so, consider maximizing the tax-deferred (or, most probably, tax-free) compounding by contributing beyond the annual amounts needed to maximize the CESGs. This can be done by making an additional lump sum contribution of $14,000, bringing the total amount contributed up to the lifetime maximum of $50,000 per child.

Jamie.Golombek@cibc.com

Jamie Golombek, CA, CPA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Private Wealth Management in Toronto.

Read the Original Article here

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Storytime for Babies, Man on the Moon and Parent’s Night Out

Hopefully all you fellow mommies have already discovered this, but seeing as how I only learned about this a couple weeks ago, perhaps it is not as common knowledge as it probably should be?

Storytime for Babies

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Rhymes, songs, bounces, fingerplays and stories for parents and caregivers with their babies.

This amazing FREE program provided by the Vancouver Public Library is a 1/2 hour of sing-a-longs, tickle games, squealing babies and crawling shenanigans. There is a story time Every Single Day in the libraries all around Vancouver. Just show up, no need to prepare, know the rhymes or prepare ahead of time.

I don’t know about you, but I honestly don’t remember many nursery rhymes. I guess it’s the combination of being a first time mom, and not having any nieces or nephews nearby. Youtube-ing “Nursery Rhymes” or “Games for Babies” is really not that exciting. The only determining factor for us in whether to go out for storytime or not was if Finn was awake or asleep by the time storytime rolled around.

Check out the VPL events calendar for storytime around you!

Here’s a guide to some Storytime categories:

Age Groups

Babytime – Recommended for newborns to approximately 18 months.

Toddler Storytime – For ages 18 months to 3 years.

Family Storytime – Suitable for children of all ages and abilities to enjoy and learn together.

Special Events

Chinese Storytime – Storytime in Mandarin and Cantonese! Super fun with a great age range of children, so beware it’s a rowdier bunch than normal Babytime! The program runs 5 weeks in Mandarin, then 5 weeks in Cantonese.

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Man on the Moon – It’s Storytime for Dads (and other male caregivers) only! Designed to encourage stoic men-folk to let out their rhyming cooing babytalk in public, Dads get an entire hour of baby bonding fun. Registration is encouraged.

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Parents’ Night Out – This one is a little hilarious to me, parents’ night out is not a hang loose, have a beer type evening. Rather it’s about crafting and learning about new ways to support your child’s learning at home. In any case, it sounds like a great time to meet other parents and chit chat, which is all a night out really needs to be!

So have fun, enjoy your public library, and go get your baby a library card (no late fees for the little ones!).

Mother’s Day Edition & Movies for Mommies

A special Mother's Day message and the first Family edition of our newsletter from the Theresa & Daniel Team!

Happy Mother’s Day to all the Mother’s, Grandmother’s and especially new and expecting first time mommies!

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~~Two days ago~~

Theresa: Mother’s Day is coming up, we should send a message to my mom since she’s travelling right now and we won’t get to do our normal Mother’s Day brunch.

Daniel: That’s a good idea, we should also do something special here.

Theresa: You mean do something special and send a photo to her??

Daniel: No I mean for ourselves…here…

Theresa: I don’t understand, none of our Mother’s are here, in town.

Daniel: I mean for You…since you’re a Mother…

Theresa: Oh…OH!!! I’m a mother now! Mother’s Day is about me!!

~~~~~

What a wonderful reminder by my dear partner about the changes in our lives, joy of everything first time and the significance of this day which takes on a new meaning for us as a new family. Cheers!

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Movies for Mommies

This month we’ve discovered Movies for Mommies! What a treat to have somewhere to go with the little one where no one is going to mind if your baby screams his head off, or you need to whip out the nursing / feeding supplies.

Movies for Mommies is a revelation – lowered / equalized volume in the movie theatre so the little guy’s ears are not traumatized, dimmer lighting for snoozeability, and mostly just the comfort of knowing I can go out and be somewhere in public and not be considered a disturbance or in the way. (Also there are apparently giveaways at some events, where better to advertise and find a captive audience of a very specific demographic!)

So let me know if you’re planning on indulging for an afternoon and I’ll come with you! Check out the showtimes below.

Movies for Mommies – The Original Parent & Baby Film Event

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http://www.moviesformommies.com/

MFM is an afternoon of decadence for you  to enjoy in a baby friendly way. What does that mean? All our films run with reduced sound levels, loud enough to hear, but soft enough to protect sensitive little ears. If it’s your first time taking your little film critic to see a movie, here is some info to make you’re outing awesome.

  1. Arrive a few minutes early so you have time to receive your membership card, and all your free samples
  2. Don’t be shy!  If you don’t have a friend to go with, lots of moms come with their babies and meet other new moms at the show
  3. Dad’s & Grandparents are people too! MFM welcomes all parents, grandparents, friends and caregivers.
  4. Splurge – that theatre popcorn is SO good, treat yourself. Enjoy the show!

Stars and Strollers – Cineplex.com

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https://www.cineplex.com/Theatres/StarsAndStrollers

THE PERFECT PLAY DATE FOR YOU & YOUR BABY

Choice of two new movies every week*
A baby friendly environment
Lowered volume and dimmed lighting
Change table
Stroller Parking Available in select theatres
Now enjoy $2.00 OFF General Admission for all Stars and Strollers performances**