RESP In 2025 - An Ai Financial Guide
The costs of post-secondary education can add up quickly, with expenses for tuition, school supplies, food, and housing. Opening a Registered Education Savings Plan (RESP) can help you save for your child’s education effectively. With an RESP, your savings can grow through contributions, as well as bonuses and grants from both federal and provincial governments. Here’s an overview of how RESPs work and their benefits.
What is a RESP
A Registered Education Savings Plan is a savings vehicle that allows you to put money aside for your children’s post-secondary education or to save for your grandchildren or other relatives.
Not only does the money you deposit in an RESP grow tax-free, but your savings will also be supplemented by Canadian and provincial government grants equivalent to 20% to 40% of your annual contributions, depending on your family income and province of residence.
By leveraging Ai Financial’s investment capabilities, your child will have the opportunity to enter adulthood with greater financial support than others, empowering them to confidently pursue diverse life choices.
You have until the end of the 35th year after the RESP was first opened to use the funds, unless your agreement stipulates otherwise. This allows the child beneficiary to take a break from school and work or travel before continuing their education if they so choose—the funds will be waiting for them for when they decide to go back to school.
Having an RESP investment account is a guarantee for a child’s future education. As parents, we might cut costs in other areas, but education expenses for our children are non-negotiable.
The Do's and Don'ts of RESP Investments
Requirements for application
When applying for an RESP investment account, the beneficiary must be:
- A Canadian resident and must be under 17 years of age.
- Have a Social Insurance Number (SIN).
- Preparing to attend an eligible post-secondary education program and requiring withdrawals from the RESP account to cover related expenses.
If the beneficiary decides not to pursue higher education, the subscriber can:
Transfer the RESP account to another sibling.
If the subscriber or their spouse has available contribution room in their RRSP (Registered Retirement Savings Plan), funds can be transferred into the RRSP.
Take your time before withdrawing funds from the account while it’s still valid. You can retain them temporarily to prevent any future needs. Typically, RESP accounts have a lifespan of 35 years.
If you wish to withdraw, you’ll need to return the government grant portion to the government, and earnings will be subject to taxation plus a 20% penalty. Some RESP investment plans/types might have additional restrictions; it’s advisable to inquire about these when opening the account.
RESP contributions are limited to a lifetime maximum of $50,000 per beneficiary.
An RESP will not affect your child’s eligibility for student loans and bursaries.
How can you open a RESP
The steps are as follows:
- Apply for SIN for the beneficiary
- Select a financial institution for your RESP investment
- Provide beneficiary information and open the account in the beneficiary’s name (remember to bring the SIN for the subscriber, the beneficiary’s SIN, and the birth certificate).
- Apply for government grants or subsidies
- Make deposits
- Regularly check your account and verify the subsidy amounts received to ensure accurate disbursements.
What types of products can be held in RESP
Despite its name, RESP is not a typical savings account – it’s a place where you can put investments like segregated funds.
Unlike an RRSP, an RESP does not reduce your taxable income. However, the capital you invest generates investment income that accumulates tax-free.
Returns will, of course, vary depending on the financial market and the investment vehicles you choose. But generally speaking, the sooner you start contributing, the higher your RESP returns will be.
Ai Financial offers this investment opportunity:
Segregated Funds
Segregated fund policies give you the freedom to invest while offering insurance protection to preserve your savings. With our choice of guarantees, you can expand your wealth and secure it at the same time.
You can purchase Segregated Funds using various accounts, including but not limited to TFSA, RRSP, RESP, Non-Reg, etc.
Why you should Invest in RESP ASAP
We often say the best time to invest was 20 years ago, and the second-best time is now. For a child, time can be one of the biggest advantages. Starting early gives the assets set aside for them more years to participate in long-term growth and compounding.
To illustrate this, assume a family contributes $2,500 per year from the child’s birth to age 13, receives a $500 government grant each year, and then contributes a final $1,000 at age 14 with a $200 grant. This would bring total family contributions to $36,000 and total government grants to $7,200.
Based on Ai Financial’s average annual return of 15.82%*, the RESP account could grow to approximately $314,482 by age 18 under this simple illustration.
That means a total contribution of $43,200, including government grants, could potentially provide over $300,000 in education and early-adulthood financial support.
This type of long-term planning can help create more flexibility when the child enters adulthood, whether for education, housing, career transition, or other major life expenses.
*This figure is calculated as of June 30, 2026 and reflects the average annual return of relevant client accounts included in Ai Financial’s calculations since Ai Financial began assisting clients with fund allocation. The return is calculated on a compound TWR (Time-Weighted Return) basis. This is also the standard return calculation method commonly shown by major fund companies in the financial industry on Fund Facts sheets and fund illustration reports. Historical performance does not guarantee future results.
The Best Time to Start Is Now
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