“An investment in knowledge pays the best interest.” — Benjamin Franklin
1. Growing Dreams – How Early Registered Education Savings Plan Contributions Shape Future Success.
The Tradex office in downtown Ottawa has always been poorly equipped for toddlers. No toys, no picture books, nothing to distract three-year-old Sarah while her mom and dad complete an Registered Education Savings Plan (RESP) application. While 2010 Sarah couldn't appreciate her parents' foresight at the time, 2025 Sarah is pretty happy about the results as she prepares for her first year in the BScN (Nursing) program at the University of Ottawa. The same could be said for our COO's daughter, Glenys (pictured), who used the proceeds from her RESP to complete a 2-year program in Comedy Writing and Performance at Humber College. No matter your child's or grandchild's post-secondary aspirations, early and regular RESP contributions can go a long way to making them happen.
2. Summary of Registered Education Savings Plan (RESP)
An RESP is one of the most effective ways for Canadian families to save for a child’s post-secondary education. While RESPs offer valuable government incentives, understanding their different types, grants, and potential pitfalls is key to making the most of them.
When you contribute to an RESP, the government can help grow your savings through various grants and bonds. The Canada Education Savings Grant (CESG) provides 20% on your annual contributions, up to a maximum of $500 per year per child, with a lifetime limit of $7,200. Families with lower incomes may be eligible for an additional grant of 10% to 20% on the first $500 contributed each year. The Canada Learning Bond (CLB) is designed to support lower-income families and offers up to $2,000 per child, starting with an initial $500 payment and followed by an additional $100 annually until the child turns fifteen, without requiring any personal contributions.
3. Choosing the Right RESP: Group, Family, or Individual Plans
Group RESPs are savings plans offered through scholarship dealers where your contributions are pooled with other members. You commit to a set payment schedule, and if you miss payments or leave early, you may lose earnings and government grants. These plans typically invest your money in lower risk options like bonds and offer little to no flexibility or customization. At maturity, your child gets a share of the total fund based on how much money is in the group account and the number of children in the group who will be attending pose-secondary education. Additionally, there are conditions to how much and often your child can take Educational Assistance Payments (EAPs) and which education programs are eligible. While group plans can provide some structure, the Ontario Securities Commission (OSC) warns that group RESP plans often have fees, strict rules, and penalties that reduce flexibility and growth.1
The alternative and better option in our opinion are individual RESPs and family RESPs. Individual RESPs are tied to one beneficiary and offer full control over contributions and investments, while still taking advantage of government grants. Family RESPs allow you to save for multiple children in the same plan and share grants between them. Both individual and family plans are generally more flexible than group plans, allow you to choose investments that match your risk profile, and let your savings grow more efficiently over time.
4. Rise of Educational Cost in Canada
As the cost of a four-year university education in Canada is estimated to be $75,387 in 2025, factoring in tuition, residence, living expenses, textbooks, and supplies, it has now become more critical than ever to plan. Average annual undergraduate tuition for domestic students has already reached $7,360, and costs continue to rise each year. By investing in an RESP, families not only benefit from tax-deferred growth but also secure valuable government contributions as mentioned above. These grants can significantly bolster savings. For example, assuming a balanced portfolio of 60% equities and 40% fixed income (yielding a 6% return per year), contributions of just $2,500 per year to your child(ren) or grandchild(ren)’s RESP from birth, could grow to approximately $96,218 by age 18, thanks to compound returns and government incentives. Furthermore, having an RESP is correlated with higher post secondary attendance rates. 75.4% of youth with an RESP enrolled in post secondary education by age 19, compared to only 59.7% without one. Altogether, an RESP not only helps families manage soaring costs but also tangibly increases the likelihood of students pursuing and completing higher education.2
If you would like to learn more about how an RESP can help secure a brighter future for your child or grandchild, we invite you to connect with a Tradex Advisor. Our team is here to answer your questions, explore your options, and guide you in creating a plan that works best for your family. You can reach us at advice@tradex.ca or by calling (613) 233-3394.