When you think of Easter, what likely comes to mind -is the Easter Bunny, egg scavenger hunts and candy galore. If we pay close attention to the activities of our festive, furry friend, there might be some hidden nuggets of financial wisdom we can find. That’s right—we can actually learn eggs-cellent money tips from the Easter Bunny, especially when it comes to saving for your child’s future. Here are a few of them:
Just like the Easter Bunny will strategically place eggs in certain spots, you’ll want to plan where you’re going to stash your long-term savings. Look at options that are best suited for your goals and help maximize your rewards.
Have a goal of sending somebunny (your child or grandchild, perhaps) to post-secondary school? If so, investing in a Registered Education Savings Plan (RESP) is one way you can help save for their future education. An RESP is an investment account that offers flexibility and helps you make the most of your money with tax-deferred growth and government-matching grants.
It works like this: Each year, through the Canada Education Savings Grant (CESG), the Canadian government will match 20% of the first $2,500 you contribute to your RESP each year, up to $500. The cap for the matching contributions is $7,200 per child over the life of the plan.
On top of this, some provinces offer additional grant money as extra incentive to save. For example, in British Columbia, children who are beneficiaries of an RESP can receive a one-time grant of $1,200 from the provincial government through the BC Training and Education Savings Grant.
Another sweet benefit of an RESP is that your contributions, government grants and earnings grow tax-free while in the plan. The money withdrawn from the RESP, also known as Education Assistance Payment (EAP), is only taxable at the time of withdrawal—when your student will likely have little or no taxable income, so the taxes they would have to pay should be minimal.
No, we’re not talking about the brightly-coloured eggs and pastel straw baskets that are staples in the traditional Easter egg hunt. In the world of investing, the phrase “don’t put all your eggs in one basket” essentially means don’t put all your money (and hopes!) into one stock, sector or market. Or in other words, diversify your investments.
Take note of how the Easter Bunny hides their eggs by spreading them out across different areas to ensure children can find them. The same strategy can apply to your education savings! You can choose an investment that will spread your money across a diversified mix of assets to minimize your risk, so your money is there when your child starts looking for it to pay for school.
Speaking of which, have you checked out our very own CST Advantage Plan yet? With CST, your money is invested in bonds and a mix of ETFs with the goal of protecting your principal while earning long-term positive returns over the duration of your plan. Since our focus is on long-term value, you can have peace of mind knowing you’ll have the money to help pay for your child’s post-secondary education.
The reality these days is that everything is getting more expensive. From housing to food to gas—and tuition is no exception. With the rising costs of living and education, students are facing financial pressures and the potential of graduating with heavy debt.
You can help ease the financial burden for your future scholar by covering some or all of their post-secondary expenses. The first step is to start saving today. Instead of splurging on more Easter goodies (there is such a thing as too much chocolate), you can put that money to work in an RESP. The sooner you start, the more time your money has to grow and benefit from the effects of compounding (one of the miracles of investing.)
Ready to hop to it? If you want to invest in your child’s future with a CST RESP, our expert team can help you get started. Then years from now, when your child starts post-secondary school, the money in their RESP will be a much sweeter surprise than anything found inside an Easter egg.
Canadian Scholarship Trust Plan is only sold by Prospectus. Please see the Prospectus at www.cstsavings.ca for more detailed information.
The Canadian Scholarship Trust Foundation and its subsidiaries, including C.S.T. Savings Inc., operate under the master brand name CST.