danescroft

My son , wife and three children emigrated to Canada (British Columbia) in August 2016 and are now wanting to set up savings plans for the three children aged 7, 14 and 17.. Woukd welcome sharing any others experience in setting something up e.g whether better to go to a Broker or rely on Banks integrity.
( In UK the Banks seem to offer the plans where they get the best commission.)

Believe the Canadian government offer a plan called RESP where they contribute towards child’s education - again is it best to rely on Bank to set up - or go to a Broker?

In addition to the parents setting up RESP, there is also the wish to set up a separate monthly savings plan, because I, as grandfather, had given monies to the parents which is to be used for the children when they reach 18. Again, any ideas will be much welcome

Almost Canadian

The benefit to setting up a RESP is that the government chips in 20% for every contribution made, up to a maximum each year, or over the life of the plan.

I wouldn't touch a bank's RESP plan and we set up ones for our children based upon the advice of an independent financial advisor. Such an expert will also be able to explain to you the other methods you may wish to use as well.

Siouxie

TFSA'a that could be used to save money (perhaps in separate accounts) and then given to the children on reaching a specific age?

Tax-Free Savings Account (TFSA)

Aviator

The govt put up to $400 a year into RESPs, however if the money does not get used for education, they take it back and there may be some tax implications.
RESP is no good for the 17 year old, as the grant eligibility ends in the year they are turning 17, even for a 14 year old, there is not a lot to gain with an RESP other than a couple of year of tax free growth. With low risk investments, which and RESP should be, the returns are not that great.

Under 18 they are unlikely to be paying tax, unless they have great jobs, so any investments they have, within reason, will grow tax free until they earn above the tax free threshold. For the 17 year old, once they start working, a TFSA and RRSP are good savings vehicles.

ann m

Bear in mind the issue here would be that the accounts can’t be in the child’s name so if in the name of the grandfather, there a $5,500 contribution limit each year. That may or may not be enough depending on what he wants to save for the kids. If grandad hasn’t saved in any TFSA’s himself yet (since they were introduced in 2009), then he may have approx $57k of cumulative contribution room he could use himself, then split it out to the kids later...

Siouxie

Yes, that was my thought also - or potentially for the parents also to open as well.

The limit is now $10,00 a year, from 2015

Almost Canadian

Not necessarily, as contributions may continue for the entire year in which the child turns 17.

This made a big difference to our kids as one of them has a birthday on December 26 and the another on February 3.

BristolUK

Back to $5500 from 2016 though.
https://www.canada.ca/en/revenue-age...ributions.html

Siouxie

Agh! Thank you for that info, seems I should have stuck with my 'gut' and gone the official route, per usual.

Apologies for getting it wrong..

BristolUK

I only knew because I double checked my contribution room a few weeks ago.

scrubbedexpat091

Has this saving for children always been a thing?

I dont know anyone with parents who saved anything for their kids.

scilly

The RESP thing has been around for about 40 years, plans then were offered by private insurance companies. The government didn't help with them.

I know we looked at a few when my daughter was around 4 or 5, but most didn't then pay out anything if the child did not go on to post-secondary education, and some others did not pay out if the child only went to college not to university .............. you lost everything you had paid in to the plan in those cases. Trades education didn't mean a thing to those plans.

We didn't see there was any value to a plan like that! Who knows how a child is going to turn out or what a child will want to do?

It made much more sense to set up a bank savings account ........... and back then, you even got interest on it! At least you would then have the accumulated savings to either help the child with a trades education or for us to use

The other thing we'd done was to take out a life insurance policy when she was born to pay out when she reached 21, our monthly payments were very low because it wasn't for very much. But the insurance agent invested it for her when it was paid at 21, and she eventually got just over $8,000 when she was 25 ............ it paid for a large part of their honeymoon and for part of her wedding costs.

I have to admit that I wasn't too happy about the honeymoon bit, I'm old-fashioned, thought the groom should pay for that!! Especially as he was the one who wanted a "honeymoon to remember", outside Canada, and didn't have the money to pay for it. But it was given to her, no strings attached.


But yes, I think most of us have done some form of preparing for the future for about the last 40 years or so .............. it became even more important as post-secondary costs got higher and higher.

Don't forget that up here, we have never had the really cheap State university that were found in so many states in the US. Students at UT in Texas paid absolute peanuts if they were in-state, and I know of others who got basically free education at their local State college.

Bleepedy Bloops

Let the kids apply for loans, then decide later if you want to help them pay it off...you'd be setting a better example for your kids if you saved the money for yourself. Then they can see what success can really mean.

scilly

You can do both!

We saved for ourselves, daughter's insurance policy didn't cost much, and she didn't know about it until she was about to turn 21 when we had the insurance agent in his annual visit discuss with her what to do with it.

She was then in 2nd year university, and opted for his offer to invest it for future use.

Meanwhile, she saw us saving, and using money wisely. She also eventually knew that I operated a bank savings account in trust for her ............ the child benefit went into that every month for 18 years.