Wednesday, 18 January 2012

Education Savings To Help You Save For Your Child’s Education

Maximizing education savings

The costs of post-secondary education are rising. A Registered Education Savings Plan (RESP Canada), which is a tax-sheltered education savings account that can help ensure that you and your children cope with those costs. By making the most of an RESP Canada— including smart investing for tax-deferred growth and eligibility for government grants — we can generate investment returns to help ensure you have enough education savings for your children.

What are the current costs and how much are they expected to go up?

Consider this:

• A 2009 study by one of the top five banks in Canada found the total cost of a four-year degree (including living expenses and academic fees) was $77,000.

• For those who lived at home with their parents, the cost was $52,000.

• The study predicted that by 2027 that cost would almost double — to $137,000 for those living away from home and $101,000 for students who stay at home.

• Statistics Canada recently reported that undergraduate students this year paid 4% more in tuition fees than last year and graduate students 6.6% more.

How can I maximize the CESG?

To receive the maximum Canada Education Savings Grant (CESG), you could contribute amounts annually to an RESP rather than a large sum at the outset; the grant is 20% on the first $2,500 contributed each year, to a maximum of $500 per year. However, an RESP strategy isn’t always cut and dried. If you have a large lump sum available (up to maximum lifetime RESP contribution limit of $50,000), we might explore investing it all to begin earning compounding tax-sheltered returns early. You would forgo some government grant money but you would immediately begin earning tax-deferred returns. A best strategy for managing the grant would depend on a discussion of your needs and situation.

Are there any advantages to a self-directed RESP?

Flexibility! There is a lot of flexibility with a self-directed RESP Canada, allowing us to take full advantage of the wide range of investments you can hold in an RESP Canada. We can work with you to make sure your strategy maximizes the savings and investment potential of an RESP Canada, as well as making the most effective use of government grants.

Regardless of what your child’s career direction will be, post secondary education will be one of the key components to his or her success. It’s never too early to start education savings and planning for your children. For more information contact Gary Mandel at Independent Financial Concepts Group by calling 416-849-1653 or visit

Tuesday, 3 January 2012

Registered Education Savings Plan (RESP) vs. Permanent Life Insurance Coverage – Which Will Give Your Child a Better Start

When most people start financial planning, their children’s future is the top priority. We all want to see our children have every opportunity in life including the ability to get an education without racking up thousands of dollars in O.S.A.P. loans. The sooner you start financial planning for your future and that of your children the better.  

We all want our children to go to college or university but how do we know that that will be the choice that they make, and what investments make the most sense for an individual who wants to start financial planning for the future, with no idea what the future may hold. 

Registered Education Savings Plan, or RESP, is an investment vehicle used by parents to save for their children's post-secondary education in Canada. There are many tax benefits if your child makes the decision to pursue a post-secondary education. If you can remember back to when you were a teen, considering your future, this can be a gamble because if your children do not pursue a post-secondary education, what began as a tax benefit will become a tax implication. 

What happens if your child is ambitious and decides to pursue a career as a doctor or lawyer or a profession that will involve education that exceeds $50,000? When you start financial planning or if you have already started, you will want to invest your money into a product that offers you the most flexibility. 

Permanent life insurance is an investment vehicle that offers many benefits and that many choose as an alternative to a Registered Education Savings Plan (RESP). Unlike a Registered Education Savings Plan (RESP), the investment component of permanent life insurance has a large contribution limit and no   restrictions on how the funds are used.  

That could come in handy if junior pursues post-graduate studies that cost more than the $50,000 lifetime contribution limit on a Registered Education Savings Plan (RESP). 

It could also be useful if junior decides to skip college and become a ski bum — because you retain control. Unlike an in-trust account, there is no age at which the assets of a life insurance policy must be transferred to the child. You can just leave the nest egg to grow until you decide the child is ready to put it to good use. 

Your child relies on you to make the decisions that enable a great start in life, before they are old enough or responsible enough to be involved in choices with respect to their financial future.  

When your child or grandchild strides out into the adult world in search of fortune, consider the value of giving him or her the gift of a debt-free post-secondary education and inexpensive life insurance, all of which can be achieved through permanent life insurance. 

Permanent life insurance also offers tax-deferred growth. Like a Registered Education Savings Plan (RESP), the investment component of a permanent life policy offers tax-deferred growth. Assuming the student has little income and therefore a low marginal tax rate when the money is needed, the tax payable should be negligible. 

In addition, by insuring a child, you are putting coverage in place when it is least expensive. The coverage will continue to provide cheap, ongoing protection when the child is an adult, and would also ensure future insurability, even in the event of health complications. 

For more information about the registered education savings plan (RESP) and permanent life Insurance coverage and which will give your child a better start contact Gary Mandel at Independent Financial Concepts Groups by calling 416-849-1653 or visit