{"id":281,"date":"2013-06-23T10:50:11","date_gmt":"2013-06-23T17:50:11","guid":{"rendered":"https:\/\/mgfadvisory.ca\/news\/?p=281"},"modified":"2018-08-23T10:50:40","modified_gmt":"2018-08-23T17:50:40","slug":"planning-for-your-childs-education","status":"publish","type":"post","link":"https:\/\/mgfadvisory.ca\/news\/2013\/06\/23\/planning-for-your-childs-education\/","title":{"rendered":"Planning for your Child\u2019s Education"},"content":{"rendered":"<div><img fetchpriority=\"high\" decoding=\"async\" src=\"http:\/\/www.mgfadvisory.ca\/images\/grad.jpg\" alt=\"insurance review\" width=\"392\" height=\"186\" title=\"\"><\/div>\n<div class=\"post-description\">\n<p>&nbsp;<\/p>\n<p>Articles that highlight the skyrocketing costs of sending your child through post-secondary education are fast and furious (here is a recent article from the\u00a0<a href=\"http:\/\/business.financialpost.com\/2013\/03\/27\/brace-yourself-this-is-how-it-will-cost-you-to-put-your-baby-through-university\/\" target=\"_blank\" rel=\"noopener\">Financial Post<\/a>).Forecasted costs to put a child through an undergraduate degree typically top $100,000 (if the student is living away from home), with $50,000 to $60,000 forecasted to be just the tuition and book costs in the not too distant future.<\/p>\n<p>So we have been encouraged to save for our child\u2019s education.\u00a0 Typically we use a\u00a0<em>Registered Education Savings Plan<\/em>\u00a0(\u201cRESP\u201d).<\/p>\n<p><strong>The RESP offers many advantages, some of which include:<\/strong><\/p>\n<ul class=\"arrow_list\">\n<li>20% Canadian Government grant on qualifying contributions (typically up to $2,500 per year), plus additional grants for lower income families;<\/li>\n<li>Provincial grants as may be available from time to time (<a href=\"http:\/\/www2.gov.bc.ca\/gov\/topic.page?id=25F4770A761640E99BDB035DD395BFD0\" target=\"_blank\" rel=\"noopener\">BC Training and Education Savings Grant<\/a>);<\/li>\n<li>The investment return earned within an RESP are not subject to tax; and<\/li>\n<li>Qualifying RESP payments to your child when he\/she is in a qualifying post-secondary school are taxed in the child\u2019s hands, which can be result in very little taxation.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>However, RESPs do have some drawbacks:<\/strong><\/p>\n<ul class=\"arrow_list\">\n<li>Only $36,000 of your lifetime contribution to an RESP will qualify for the 20% Grant.; If you wish to save more, you won\u2019t avail yourself of the grant.<\/li>\n<li>RESP investments are typically in marketable securities.\u00a0 If so, there is no assurance of any significant investment return, and in fact some people will lose some of their grants and contributions in the form of market losses.<\/li>\n<li>If the RESP is in fixed income investments (GICs, bonds), they are currently very low yielding and not providing much of a return over the past couple of years.<\/li>\n<li>Scholarship type RESP plans can be very inflexible of how and when you can receive qualifying payments from the plan.<\/li>\n<li>If you child doesn\u2019t go to post-secondary, you\u2019ll have to do something: move it to another child who can take over the RESP as a beneficiary and who isn\u2019t already at the maximum contribution for RESPs (and the associated grants); or close the plan. If you close the plan, you may end up losing all grants received and deferred investment income earned (the latter may be somewhat saved if the contributor has unused RRSP room).<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>I prefer to have my clients buy an non-scholarship RESP which has elements of guaranteed investment bonuses, and flexibility on how and when you take monies out when your child goes to post-secondary school.\u00a0 But I would only recommend contributing to an RESP up to the $36,000 lifetime contribution that would qualify for the 20% grant.<\/p>\n<p>For any additional planned savings for your child, I would strongly recommend buying your child a Whole Life insurance product:<\/p>\n<ul class=\"arrow_list\">\n<li>The cost of insurance for your child is small, leaving much of the annual premium to be deposited in the \u201ccash value\u201d of the policy;<\/li>\n<li>The Whole Life policy cash value can only grow in value, which is not directly correlated with marketable securities value;<\/li>\n<li>All growth in the Whole Life value is tax-exempt;<\/li>\n<li>You can access the Whole Life policy\u2019s cash value, typically on a tax-free basis. This cash surrender value can be used for whatever purpose you see fit (post-secondary, buying a first car or home, travel, etc.); and<\/li>\n<li>You can keep the ownership of the Whole Life policy for as long as you like, and when it is time you can transfer the Whole Life policy to your child on a tax-free basis. This policy in your Child\u2019s hands can help reduce or eliminate future insurance premium costs to cover their family insurance needs.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>For more information on RESPs, refer to the Canada Revenue Website (<a href=\"http:\/\/www.cra-arc.gc.ca\/tx\/ndvdls\/tpcs\/resp-reee\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.cra-arc.gc.ca\/tx\/ndvdls\/tpcs\/resp-reee\/<\/a>) and contact me about my preferred RESP plan at\u00a0<a href=\"mailto:marco@mgfadvisory.ca\" target=\"_blank\" rel=\"noopener\">marco@mgfadvisory.ca<\/a>\u00a0or\u00a0<a href=\"tel:604-789-3888\" target=\"_blank\" rel=\"noopener\">604-789-3888<\/a><\/p>\n<p>For more information on Whole Life, refer to this Equitable Life Brochure (<a href=\"http:\/\/www.equitable.ca\/media\/106734\/1131-2_final.pdf\" target=\"_blank\" rel=\"noopener\">http:\/\/www.equitable.ca\/media\/106734\/1131-2_final.pdf<\/a>) and contact me with any questions or to set one up.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"&nbsp; Articles that highlight the skyrocketing costs of sending your child through post-secondary education are fast and furious (here is a recent article from the\u00a0Financial Post).Forecasted costs to put a child through an undergraduate degree typically top $100,000 (if the student is living away from home), with $50,000 to $60,000 forecasted to be just the&#8230; <p><a class=\"view-article\" href=\"https:\/\/mgfadvisory.ca\/news\/2013\/06\/23\/planning-for-your-childs-education\/\">View Article<\/a><\/p>","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-281","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/posts\/281","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/comments?post=281"}],"version-history":[{"count":0,"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/posts\/281\/revisions"}],"wp:attachment":[{"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/media?parent=281"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/categories?post=281"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mgfadvisory.ca\/news\/wp-json\/wp\/v2\/tags?post=281"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}