I Have 10,000 Dollars What Can I Invest in for My 1 Year Old Daughter?

I would advise that you invest the money in your daughter’s future education by saving it in a Registered Education Savings Plan (RESP) account.  All you need to do is to find the right RESP Company in cbj.com website and start saving the $10K as early as now.

In a nutshell, let me explain what an RESP is and how it works. That will help you know what you are venturing into as a parent.

What is an RESP?

RESP is a registered education savings plan sponsored by the Canadian government to help parents save for their children’s post-secondary education. It’s available to Canada residents who wish to invest in their kids’ learning more securely and reliably.

The government provides incentives to RESP beneficiaries to encourage many Canadian parents to save. The incentives include tax-free growth of investment plus interest gained and guaranteed grants from the government. The grants you’ll likely receive include:

• The Canada Education Savings Grant (CESG)https://studygroom.com/how-financial-programs-like-rrsp-resp-and-rdsp-work-in-canada/
• The Canada Learning Bond (CLB)
• Provincial government grants in Quebec and British Columbia

The Canada Education Savings Grant (CESG) is automatically available to all people who have an RESP account. The Canada Learning Bond, on the other hand, is only available to low-income families, and one must apply for it.

How an RESP Works

When you take out an RESP, you should contribute part of the $10,000 into the account at intervals. The government will then award you a 20 per cent CESG of any contribution you make up to CA$2,500 per year. In other words, you are entitled to a $500 grant yearly.

You can take full advantage of this government grant by contributing at least CA$2,500 into the account every year. While there is no yearly contribution limit, the maximum lifetime contribution limit for each RESP beneficiary is CA$50,000

If you over-contribute, the government will subject the excess amount to taxation. You will pay one per cent of the excess amount as tax every month until the day you withdraw the excess money. So, you don’t have to over-contribute to maximize savings.

When your daughter enrolls in an eligible post-secondary institution, she can withdraw the funds and use it to finance her educational expenses. Such expenses include housing and tuition fees. She can withdraw the grants and accumulated interests as Educational Assistance Payments (EAPs). Taxes on withdrawals are usually very minimal.