RESP Do's and Don'ts

Article courtesy of the Ontario Securities Commission (OSC)

Expecting a baby can be an exciting and overwhelming time in your life. There's a lot of information to take in about all aspects of parenting, from childbirth to a longer-term goal: saving for your child's education.

You've probably heard about Registered Education Savings Plans (RESPs) and the government grants available to help you save for education after high school. You may even have family members offering to kick-start your investment as a way to welcome your new baby into the world.

So how do you get started?

First of all, don't feel pressured to open a plan right away. Before you can open an RESP, your child will need a birth certificate and Social Insurance Number. You'll also need to do some homework and decide which plan best suits your needs.

Here are some do's and don'ts to help you choose an RESP:

DO:

· Shop around. Different types of plans are available through banks, credit unions, mutual fund companies, investment dealers or scholarship plan dealers. Make sure you know all your options before you decide.

· Take advantage of federal government grants available. Visit www.canlearn.ca to find out which grants you qualify for.

· Decide how much you can afford to contribute. Most plans let you decide how much and when to contribute, while some plans require you to follow a set schedule. In this case, make sure you find out what happens if you miss a payment.

· Consider your child's future choices. Find out which postsecondary programs qualify, and what happens if he or she decides to go to Europe instead of school.

DON'T:

· Rush your decision. An RESP is a major investment, and you owe it to yourself and your child to take the time to check it out.

· Invest in anything you don't fully understand. Different plans have different features, risks and costs. Make sure you know all the fees you're expected to pay.

· Sign anything that you haven't read carefully. Reading the fine print now can save you some unpleasant surprises down the road.

· Miss the boat on the "cooling off" period. You have the right to change your mind. With group scholarship plans, you can cancel the plan at no cost within 60 days of signing the application. This may vary for other types of plans.

As Ontario's capital markets regulator, the Ontario Securities Commission (OSC) can help you make an informed decision before you invest. To learn more about the different types of plans and questions to ask, visit www.checkbeforeyouinvest.ca or call 1-877-785-1555 to order a free copy of Saving for your child's education*.

Article courtesy of the Ontario Securities Commission (OSC).
www.checkbeforeyouinvest.ca
1-877-785-1555