Contributing to a Registered Education Savings Plan is worthwhile if you are certain that the money contributed will be used for higher education of the beneficiary. Let's catch up with some more details.
RESP Canada is a registered investment plan that allows your contributions to grow tax free when the investments are within the account. It is solely open to fund the post-secondary education of the beneficiary.
The main advantage of RESP is that it can be opened by anyone for anyone. It does not matter if the beneficiary and the contributor are related by blood or not. Let’s figure out if contributing to RESP is really worth the hype.
Contributing to RESP is worth it if you are sure that the funds accumulated will be 100% used for post-secondary education of the beneficiary. It is truly worthwhile for the following reasons:
The earnings that you accumulate within a RESP grows tax-free.
You have the option to invest in shares, bonds, mutual funds, ETFs, GICs, fixed interest etc.,
The following grants are provided by the government
Here the government makes contributions of 20% of your contribution to a maximum of $600 per year and $7,200 lifetime for each RESP beneficiary.
The government contributes up to $2,000 (in the lifetime of each RESP beneficiary) to children from low-income families. The initial contribution starts at $500. You are assessed every year and if you are still eligible you get an additional $100.
This is available to residents of BC and the government contributes $1,200 to eligible children between the ages of six and nine.
This is available to residents of Quebec. The government makes contributions of 10% of your contribution to a maximum limit of $3,600 per beneficiary.
Having said all the above, if the funds contributed to RESP are not used for post-secondary education, then the accumulated earnings is taxed at your marginal tax rate plus a 20% fine is levied.
Thus, if you have already reached the contribution limits of TFSA and if you are confident about the usage of the contributions, it is worth it to commence and contribute to a Registered Education Savings Plan.
Registered Educational Savings Plan is a tax advantageous investment plan registered with federal government of Canada. This is used to accumulate funds for higher education.
There are various benefits of contributing into a RESP. These include tax advantage, receiving of government grant, available investment options etc.
There are various online brokerage platforms in Canada. We believe that Questrade, Scotia iTrade and CIBC investor's edge are the best alternatives to Wealthsimple.
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Yes, opening a Tax Free Savings Account or TFSA surely seems to be a good idea. In fact, TFSA is good for a person who is 18 years or above and is looking for long term investment.
No, you cannot open an investment account in Canada while you are a Non-resident, the exemption being - Tax-Free Savings Account (TFSA). Having said that, you can continue to hold the investment accounts that you once opened while you lived in Canada.
At present, the potential to open a brokerage account in Canada, while being a non-resident is complicated and has numerous terms and conditions. This varies from broker to broker. To become savvy in this topic, continue reading.
Principally, a Registered Retirement Savings Plan (RRSP) is a tax effective tool to grow your retirement funds at a compounding rate. However, its worthiness for a specific person depends on various aspects. Continue reading to find what they are.
Based on our analysis Wealthsimple is a good alternative to Questrade for its cost effectiveness and Qtrade is a good alternative for Questrade for its customer services and research tools.
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