Registered Education Savings Plan (RESP)

When I was in university the combined cost of tuition, books, food and residence nearly killed my parents and I.  It took everything we had to get through it all but I was very happy to graduate virtually debt-free.  If only we had a Registered Education Savings Plan (RESP) it would have made things much easier.

The Registered Education Savings Plan (RESP) is a great way to start saving for your child’s post-secondary education.  Tuition costs have skyrocketed over the past decade and this is a trend that will likely continue for some time.  As parents, it is important that we take advantage of every tool at our disposal to help give our children the best opportunities in life.

The RESP allows us to do just that by letting our contributions grow on a tax-sheltered basis.  What’s more is that the government will match up to 20% of our contributions up to a maximum of $500.  As is the case with all investing, the sooner you start saving and investing the better off you’ll be down the road.

In our Registered Education Savings Plan (RESP) we hold low-cost TD e-series index funds.  The breakdown is as follows:

25 % TD Canadian Index Fund – e (TDB 900)

25% TD US Index Fund – e (TDB 902)

25% TD International Index Fund – e (TDB 911)

15% TD Canadian Bond Index Fund – e (TDB 909)

10% TD Canadian Money Market Fund (TDB 164)

We contribute the annual amount of $2500 so we can get the 20% match from the government. Our strategy for contributing is to use the $100 we receive each month from the universal child care tax credit and make up the difference at the beginning of each year. This ensures that we receive the maximum government contribution of $500.

If you’re interested in opening a TD e-Series RESP check out my article on How I Set Up My TD e-Series RESP.

For more information about the RESP check out Mike Holman’s, The RESP Book: The Simple Guide to Registered Education Savings Plans for Canadians on Amazon.