How much are you saving for your childs education?

[Ben]

Pretty relevant topic for me, since I'm only 2 weeks into this parenting thing. My wife's parents are putting in $1000 this year, so we'll do the other $1500. Perhaps this arrangement will continue in years to come. Need to actually set up the RESP in the coming months.

Not sure how I feel about a fully funded education. I think I'd like to cover the first couple of years, and let them take loans for the rest. In our school days, we all recall seeing kids born with silver spoons in their mouths handed everything they want, and perhaps a bit of a negative correlation with how seriously they take school. I suppose good parenting could counteract that...

[Four Pillars]

Originally Posted by Sampson

Interesting to hear what others are doing.

I'm just starting planning RESP contributions for our first child (to come in Nov), and I was thinking of maxing out the $50k, preferably most of it in the first few years (as much as possible).

Do any of you think that the RESP could grow too large? Based on the TD Economics Report released late last year, my projections have a fully funded RESP still not reaching $135k.

Interesting thought. I definitely think it can get too large although the ramifications of that are not too significant. Perhaps the student will pay a bit of income tax withdrawing the money.

Of course if you put $50k in now, and the returns are really good for the next 15 years....you might need to have more kids just to use up the money. :P

[Sampson]

Originally Posted by Four Pillars

Of course if you put $50k in now, and the returns are really good for the next 15 years....you might need to have more kids just to use up the money. :P

Well if you put it that way...

We certainly can't afford to max out in the first few years, but say get to the $50k cap by year 12-14 (average $3-5k) for the first few years.

I'm actually quite seriously considering using a self-directed account vs. the 'standard' TD e-series, since I think we will try to get a sizeable lump in there early. We'll see, I'll have to mine the blogs for expense projections..., we'll probably end up broke like all other parents

[Cal]

I thought I would comment on this now, as not married, no kids, perhaps I would look back on this and see how my views have changed.

However, I had only planned on putting approximately enough in a childs RESP (over time) to cover their tuition. Then the child would have to use their summer job $ for some of their schooling, depending upon where they decide to attend/live/study. Getting a bit of an appreciation for the value of a dollar.

Hey I dunno...maybe they will take after their mother and be smart enough to get a scholarship or bursary.

[Addy]

Thanks everyone, it seems there's quite some interest in this topic. I'm a bit jealous of those who have grandparents helping out; my folks and my hubby's mom are all pretty much financially destitute, so there's no chance of them helping out with anything. Ever. But thats okay, we can do it on our own.

My husband corrected me - we put $100/month and top up when we can to max it to $2500/year as well (to get the max grant). The free money (grant) is a big draw for us. I believe you get $500/yr grant is it? It maxes out though over time I'm pretty sure... I used to know all this by heart but it's been a couple of years now. What is the lifetime max grant amount, anyone here know?

[Four Pillars]

Originally Posted by Addy

Thanks everyone, it seems there's quite some interest in this topic. I'm a bit jealous of those who have grandparents helping out; my folks and my hubby's mom are all pretty much financially destitute, so there's no chance of them helping out with anything. Ever. But thats okay, we can do it on our own.

My husband corrected me - we put $100/month and top up when we can to max it to $2500/year as well (to get the max grant). The free money (grant) is a big draw for us. I believe you get $500/yr grant is it? It maxes out though over time I'm pretty sure... I used to know all this by heart but it's been a couple of years now. What is the lifetime max grant amount, anyone here know?

$7,200.

Here's a post I did which is basically a quick summary of RESP rules.

http://www.moneysmartsblog.com/2010-...hdrawal-rules/

[CanadianCapitalist]

Originally Posted by Sampson

Well if you put it that way...

We certainly can't afford to max out in the first few years, but say get to the $50k cap by year 12-14 (average $3-5k) for the first few years.

I'm actually quite seriously considering using a self-directed account vs. the 'standard' TD e-series, since I think we will try to get a sizeable lump in there early. We'll see, I'll have to mine the blogs for expense projections..., we'll probably end up broke like all other parents

The max. RESP contribution is $50,000.
The max. CESG is $7,200.
The RESP contribution that gets the maximum CESG is $36,000

I suppose you could contribute $14,000 upfront and then contribute $2,500 over 14.4 years to maximize the CESG. I think the CESG is far too valuable to give up even with the additional years of tax sheltering.

Hey, there's enough for a blog post here

[Addy]

I thought the annual limit was $500 of grant money, with the lifetime max ($7200 as pointed out). I don't believe you can get the lifetime max right away.. although that would be nice!

edit: Ahh I see, I misunderstood CC's post. I still think there are maximums though you can put in each year? I know, I need to stop asking and start reading, especially since Four Pillars so kindly posted a link to it all!

[HaroldCrump]

Originally Posted by Addy

I still think there are maximums though you can put in each year?

There used to be, not any more.
If you wanted to, you could put the entire $50,000 in at one shot.
However, you'd get only the max grant for 1 year i.e. $500.
You'll miss out on the other $6,700 since you have maxed out the lifetime limit.

For someone with a newborn baby and the $50,000 in hand, some quick math can be done to figure out whether lumpsump contribution in the first year allowed to compound for the full 17 years is more profitable rather than the more common $2,500 every year to get max. CESG grant.

[Sampson]

Originally Posted by CanadianCapitalist

The max. RESP contribution is $50,000.
The max. CESG is $7,200.
The RESP contribution that gets the maximum CESG is $36,000

I suppose you could contribute $14,000 upfront and then contribute $2,500 over 14.4 years to maximize the CESG. I think the CESG is far too valuable to give up even with the additional years of tax sheltering.

That was the plan . Although depending how you model the ROR, I still think 12+ years of tax sheltering can exceed the benefit of the CESG. Any arguments (or math) against this?

Originally Posted by CanadianCapitalist

Hey, there's enough for a blog post here

Now you FT, and Mike have to see who gets the post out first Make sure to include some examples and math please

OT: have you guys ever considered a series of 'cross-over' blog posts, like Superman vs. Spiderman sort of deal?