Canada Life recently conducted a study and surveyed 1510 Canadians.
To no one’s surprise, they found that more than 80% of Canadian parents didn’t even understand the RESP. You Can Learn More Here.
The study also concluded that even though 92% of Canadians are aware of RESPs – only 17% said they were aware of only the most basic part of the RESP, the maximum annual amount they can contribute ($2,500) and the amount of government grant they’ll receive ($500) that’s it nothing more.
While the authors use sophisticated language to impress like “Getting the most out of a saving plan requires appropriate financial guidance that many parents aren’t receiving”.
What they’re really saying is that parents aren’t getting the right information to make informed decisions for their children’s futures.
And who’s fault is that? Not the parents who are taking active steps to learn but getting the wrong information ALL the time.
If information is power, then education is empowerment. How can parents educate themselves to feel confident in their decision on the future of their child?
By asking the right questions.
Why do parents get the wrong information?
Because the people selling them RESP’s, like the RESP sales companies, who are continuously being sued for deceptive sales practices or the banks who make hundreds of millions every year in account and investment management fees from their children’s RESP accounts don’t want to give parents all the information, so they can make the best decision for their child’s future.
Here are the top three questions you need to ask before you open an RESP.
- Does my child have to pick a university or program that is approved by the government of Canada to use their RESP?
- What happens to my child’s RESP account if my child when they are 18 chooses an education program or university not on the government-approved list to not go to university?
- Do we need to pay taxes and a 20% penalty on the growth of the account if the account has to be closed because they chose a program not on the government-approved list or not to go to university at all?
Education in a post-Covid world is changing daily, going more online and becoming more expensive.
The financial companies selling RESP’s know that dangling a carrot of a 20% matching grant from the government with no other information will get your money and you won’t know the downside or risk until your child is 18.
And the person who sold you the RESP and gave you the wrong information is gone.
Who knows what education will look like, 5, 10 or even 15 years from now.
What if your child wants to study abroad, take a year off, or pursue a different path than going to university?
Twenty years ago, if I grew marijuana, I went to jail so there were no education programs to teach me how to grow marijuana.
Now companies want to hire me to grow marijuana.
If I wanted to become a mechanic, I went to a trade school to learn to change oil.
Now there is Tesla. Who’s changing the oil?
As a parent, your mission is to prepare your child for the future and prepare the groundwork for their future by looking at all options and not only those dangling the carrot.
It’s up to you if they have all the options to succeed and be happy in life, not the financial companies.
Child Plan is a participating whole life insurance plan. Participating whole life insurance was started in 1847.
And they never missed giving children a tax-free annual dividend in 174 years.
The RESP was started in 1998. 23 years ago and the companies who sell the plans are constantly being sued by parents for deceptive sales practices or stealing their personal information from hospitals to sell them RESPs.
You can read more here and here.
Child Plan is a Participating whole life plan and the fastest-growing alternative to the RESP and the only tax-free education savings plan that parents and grandparents can open for their children and grandchildren in Canada.
Money can’t buy happiness. But it can buy options.
To learn more about Child Plan, request an illustration.
If information is power, then education is empowerment!
Child Plan – the fastest growing alternative to the RESP.
