(NC)—Shopping for the perfect gift can sometimes feel like searching for a needle in a haystack or an Olympic sport with masses of shoppers hurtling over one another for that last must-have toy on the display. The time, thought and sheer mayhem of it all is enough to turn you from being jolly Saint Nick into a sour Scrooge.
Instead of the standard holiday gifts that are often quickly forgotten, such as sweaters or video games, why not give a loved one something completely unique that will only increase in value as time goes on.
With the rapidly rising costs of university and college tuitions, many parents and students are concerned about how they will fund their academic future. Gift-givers can ease that stress this holiday season by giving them an RESP (Registered Education Savings Plan). Through an RESP, family and friends can contribute to a child's future education and contributions to the plan grow tax-free over the life of the plan.
“RESPs make great gifts because it's a solid investment in the recipient's future,” says Linda Knight, president and chief operating officer, BMO Mutual Funds. “While they might be too young to appreciate this gift now, in time they'll be grateful for the support.”
Anyone can open an RESP account as long as they have a valid social security number. While there is no yearly contribution limit, the lifetime contribution limit for each beneficiary is $50,000. Funds can be withdrawn by the beneficiary once he or she is enrolled in an approved post-secondary education program. Funds withdrawn can be used towards tuition costs as well as living expenses.
Even better, the Federal Government also contributes through the Canada Education Savings Grant (CESG). Through this grant, the Government of Canada contributes 20, 30 or 40 cents for every dollar saved – depending on family income – directly into the RESP.
Whether a loved one is five months old or five years old, it's never too early to start saving. In fact the sooner you start contributing to an RESP the better the investment growth. For example, if Aunt Rita gives her two-year-old nephew Jack a $150 RESP contribution yearly for 16 years (assuming a 5 per cent rate of return), Jack will have more than $6,000 to use towards his tuition by the time he's 18.
Working with an investment professional can help you determine the best way to save for your loved one's education. At BMO Bank of Montreal, you can meet with a financial planner at any branch, free of charge and they will work with you to create a customized and practical plan. Visit www.bmo.com for more information.
Source: www.newscanada.com
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