Obtaining a good education has become an asset in the life of many children. However, this does not mean that the cost of paying for post-secondary studies has become any less. Many people are financially burdened with paying for college or university and end up taking student loans which Parents should, therefore, take the initiative to start saving up for their children before time to pursue tertiary level education comes. By opening an heritage education funds RESP, parents are motivated to invest in the post-secondary education for their children. One can begin the setup process by following the guide below.
1. Obtain a social insurance number
Before opening RESP, you will be asked to provide proof of the identity of the recipient. You should, therefore, submit the birth certificate residency or social insurance number of your child. To be eligible to set up the account the recipients must be Canadian. In case there are any other beneficiaries you would like to include you should also provide their security insurance numbers.
2. Analyze the different options
There are various plans you can choose each with are rules and restrictions. There are three option plans individual, family, and group. Determine the one that best meets your needs. As you weigh your options, look at both the advantages and disadvantages of each option. Compare the fees charged by the choices and settle for one that is most convenient for you.
3. Choose a payment plan
Once you have selected your favorable option, decide how you will invest your savings. Different providers offer different payment plans. Your Registered Education Savings payment plan will determine when you will deposit your savings. It is, however, recommended to opt for the method that allows you to save regularly. Inquire what you will incur when paying for the plan and any other investment costs.
4. Select your account
Determine where you will put your savings. The mutual funds, savings account, stocks, and bonds can be considered as heritage RESP investments. Depending on how you want to invest your savings you can either choose he no risk account or mutual funds account that faces some risks. There is also the option for using a low-risk account.
5. Carefully read the contract
Before signing the agreement, ensure you go through the terms of the contract word by word. You should understand all the rules and restrictions of the payment plan you choose. See to it that the provider answers any questions you may have regarding the policy in case there is something you do not comprehend. Being aware of how the Registered Education Savings Plan works will allow you to have a satisfying saving experience.
6. Apply for grants
Once your heritage education funds RESP is set and running, the provider will proceed to apply for grants from the federal government on your behalf. Incentives from the government will give an opportunity for your returns to grow. The federal and provincial government periodically offers substantial grants to holders of RESP accounts to encourage parents to invest in the post-secondary education of their children.