Financial advisers say rapidly rising inflation and unchanging caps on RESP benefits mean it’s more important than ever for parents to have aggressive growth-oriented stock portfolios
Clients sometimes ask Zainab Williams to open a registered education savings plan for them, thinking it’s just a savings account to park money for their kids’ postsecondary schooling expenses.
Increases have been drastic in student towns as well. The average two-bedroom unit in Waterloo, Ont., is now $2,543 a month, compared to $1,708 three years ago. That’s more than $10,000 in added rent costs per year.offers within the RESP program have remained unchanged for years. The Canada Education Savings Grant, which automatically matches 20 per cent of your contributions to maximum of $500 each year, has had that maximum unchanged for almost 15 years.
“Once reality hits, we may not have the stomach to see our portfolios drop without understanding that these are just turbulent times,” said Ms. Williams. He also pointed out that losses in an RESP can’t be claimed for tax purposes, unlike other investment accounts.One avenue Ms. Williams suggests is using a target date fund that automatically changes your asset allocation as you come closer to the date you expect to use your RESP money. Financial planners and institutions can set up these kinds of investments, and they generally start with a split of 90 per cent in diversified stocks and 10 per cent in bonds.
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