One of the first money lessons you teach your child is to save every penny. A little tooth fairy money here, some birthday cash there, and soon, they can afford their very own slime kit. With your help, your young saver learns how small amounts of money can amount to something amazing.
So many of us grow up and forget this lesson. Too often, we’re so busy adulting and worrying about paying bills, that we tell ourselves investing can wait. We also tell ourselves that investing isn’t worth it unless we have tons of cash to start with (which couldn’t be further from the truth).
This misconception might be why over a third of Canadians aren’t saving in an RESP.
A 2020 study from Statistics Canada found that just over two-thirds (69%) of Canadian children under the age of 18 have savings set aside for their postsecondary education, with 85% of these children having savings in a Registered Education Savings Plan (RESP). Though this number has risen in the past few years, it’s not high enough, and we hope to help it reach 100% by making it easy for all parents, grandparents, aunties and uncles to save for their children’s future.
Why is it concerning that so many Canadians aren’t saving for education in an RESP?
Because by not taking advantage of investing in an RESP, Canadians are potentially leaving thousands in government money on the table—money that could help pay for a child to attend school and follow their dreams. After all, the Government of Canada matches RESP contributions up to a maximum of $500 each year (or up to $1,000 if you’re catching up on previous years), up to a lifetime maximum of $7,200 per child.
Saving small amounts at a time can help you achieve bigger goals
When you invest a little at a time, you don’t have to take a hit on your lifestyle. (You can afford your kid’s guitar lessons and your favourite holiday cookies this winter.) Over time, the little amounts you invest add up and can grow with investment earnings.
One of the easiest ways to invest when you’re feeling the pinch is to set up auto-contributions. It could be $10 a week, or maybe $100 a month—whatever you think you can handle. The idea is that the money automatically comes out of your chequing account and into an account or plan that can grow. That way, you aren’t tempted to spend it on another night of Chinese takeout, and you get used to making do with just a wee bit less each month.
Another smart option is to invest any unexpected windfalls
From birthday money to tax rebates to bonuses at work, money that you don’t expect is usually the money you don’t need to pay your day-to-day bills. If you can invest $500 a year this way in an RESP, the government will add $100 in matching contributions (if you haven’t already received the annual maximum amount). And over time your money could rack up investment earnings too. So next time you have extra money, think about investing it for the long term instead of spending it on forgettable restaurant meals or toys your kids lose in a week.
Getting started—the sooner the better
Wondering when is a good time to start investing? The answer is now. You’ve probably heard the investment advice to “start early” over and over again. And that’s especially true if you’re starting small since small investments don’t lead to big returns at first. But as you invest bit by bit over the years, your investment compounds and your earnings can transform into more earnings.
You guessed it! You can start small with an RESP too.
You don’t have to wait until you have a big sum of cash before opening up an RESP for your kiddo. But the smart move for investing is to get up and running ASAP. While your money only grows a little at first—because there’s only a little to begin with—it can compound and grow into more and more over the many years. That’s because you’re investing not only your contributions, but matching government grants as well, and investment income too! That’s the magic of compounding. So don’t stress about investing a lot of money; focus on investing early.
With a CST Spark RESP invested in a CST Spark Education Portfolio (mutual fund), you can save for your child’s dream university, college, or other training post-secondary institution simply by investing early and often, in amounts that are doable with your budget.
We make it easy to invest with as much—or as little—as you can
You can choose to invest a little here and there, once a month, or once a year. Thanks to our flexible online investing options, you can invest the $50 your kid received in a card from grandma with just a few clicks. There’s no waiting in line or piles of paperwork. And our secure, interactive website makes it easy for you to see what’s happening with your RESP.
And, depending on your income level, you might even qualify for a $500 Canada Learning Bond right away. See? Even if you start small, the government is kicking in moola to help you save!
So why not take a few minutes to get your RESP off the ground? With CST Spark’s digital platform, you can open an account and/or invest from wherever you are in Canada, with whatever you have. And as always, if you have any questions, reach out to us over the phone or chat with us, 6 days a week.
When your future scholar is squealing with excitement over a letter from the university or college of their dreams, you’ll be pretty glad you used your extra cash to invest in their RESP.
CST Spark Education Portfolios are sold only by Prospectus. Investors should read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
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