Some of the best RESP plans in Canada can help you pay for your child's education costs, relieve them of a lot of stress, and keep them from having to take out huge student loans.
According to statistics from Statistics Canada, there was an average tuition fee for undergraduate programmes in Canada in 2021 of $6,580 per year. It was even more expensive for people who wanted to go to school for things like dentistry and veterinary medicine.
The cost of Canadian university education is expected to keep rising, so making the most of your child's registered education savings plan is important.
What Exactly Is An RESP?
An RESP, which stands for Registered Education Savings Plan, is a specialized account that allows parents to save and invest money for their child's future post-secondary education. Similar to RRSPs, TFSAs, and other registered plans, RESPs benefit from tax-deferred growth, enabling faster accumulation of savings over the long run.
A key feature of RESPs is that the Canadian government provides grants to match a portion of the contributions parents make. The Basic Canada Education Savings Grant (CESG) matches 20% of annual contributions up to $2,500 per child, up to $500. Lower income families may qualify for even more grant money through the additional CESG and Canada Learning Bond.
In essence, the government incentives and tax breaks associated with RESPs aim to make college or university more affordable and accessible. By supporting parents in saving towards their child's education, there is a broader benefit to society in the form of better education, less poverty, increased skills, and economic growth stemming from a more highly trained workforce. RESPs can relieve a huge financial burden both for individual families and at a societal level.
Canada's Top RESP Providers
When it comes to investing your RESP, you'll need a "RESP provider," which could be a bank, credit union, trust company, or online wealth manager. You need this person to help you with your money.
RESP providers in Canada invest your RESP contributions and any grant money you qualify for, such as the Canada Education Savings Grant and the Canada Learning Bond. They also invest any money you qualify for from a provincial education grant like the BCTESG.
Choosing an online wealth management company is a good option if you want to invest in a low-cost RESP without a lot of work. The best RESP providers in Canada that we have looked at are:
- RESP CI Direct Investing
- Questrade RESP
- Wealthsimple RESP
- Justwealth RESP :
1. CI Direct Investing RESP
The robo-advisor has two types of portfolios: low-cost ETF portfolios and private portfolios that invest in real estate, mortgages, options, and other assets. They are usually only available to those with a lot of money to invest.
Below are the fees for CI Direct Investing RESPs:
- The first $150,000 was 0.60%.
- The next $350,000 was 0.04%.
- However, 0.35 percent, on the other hand, of $500,000
- The MER in ETF portfolios ranges from 0.16 percent to 0.25 percent.In private investment portfolios, the MER ranges from 1.00 percent to 1.40 percent.
In the same way as Questrade, you also need at least $1,000 to start investing in an RESP. To set up an RESP account at CI Direct, you will get the following:
- Your financial advisor and financial planning team are there to help you.
- Access to a wide range of stocks
- There are no fees to trade.
- You can get up to $150 back when you move an account with a balance of at least $25,000 from another financial institution to a new one at Bank of America.
2. Questrade RESP
There are RESP plans available through Questrade's managed investment service, Queswealth Portfolios.
Your government grants are put into the plan, and it grows tax-free.
The fees are:
- Balances ranging from $1,000 to $100,000 are eligible for a 5% interest rate.
- 0.20 percent for accounts with a value greater than $100,000
There is also a fee for ETFs you use in your portfolio, which can be anywhere from 0.07% to 0.22%.
Make sure you know that the minimum investment you can make on Questwealth starts at $1,000.
3. RESP Wealthsimple
In Canada, Wealthsimple is the best robo-advisor. It has more than $10 billion in assets under its management.
It has an RESP investment account that can be used for both individual and family RESP plans.
These grants go into your Wealthsimple RESP account if you are a recipient of the CESG, A-CESG, BCTESG, or CLB. Also, there isn't a minimum amount that you need to start with.
The fees are:
Wealthsimple charges an annual fee for managing your account.
- 0.50 percent is for investment accounts with less than $100,000. This means that for every $1,000 you invest in the stock investment, you will earn $5 per year.
- 40% of accounts have a balance of more than $100,000.
The ETFs that you use to invest in your RESP also have fees built-in. These fees are paid directly to the ETF providers. The average fee for an ETF is 0.20%.
Parents who want to be in charge of their child's RESP account and choose the investments and rebalance when necessary can use the Wealthsimple Trade Platform.
4. Justwealth RESP
Education Target Date Portfolios from Justwealth are a unique plan to set up an RESP.
The Justwealth Capital Preservation Portfolio is what this RESP account turns into when your child turns 18 and starts going to college.
Your goal for the RESP is to start when your child turns 18 in 2040, if they were born in 2022.
The annual management fees are:
- 5% for accounts with a balance of less than $500,000.
- Accounts with a balance of more than $500,000 receive a 40% discount.
The average annual fees for the ETFs used to build your RESP portfolio are 0.20%, or 0.20 cents per year.
For RESP accounts, there is no minimum account amount with Justwealth.
Take note that the minimum fee for an RESP each month must be a minimum of 2.50.