Have you started an RESP yet?

Article courtesy of the Ontario Securities Commission (OSC)

It's not too late

Most parents want their children to get a good education, but the rising cost of tuition might have you worried about whether you can afford to send your child to college or university.

A Registered Education Savings Plan (RESP) can be a great way to save because the earnings grow tax-free until the money is withdrawn. The federal government also offers grants to help you save. Many parents open an RESP by the time their children are three or four, but if you haven't started a plan yet, it's not too late.

But not all RESPs are the same. Before you commit to a plan, do some research and find one that 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 government grants. 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