best way to save money?

[tanya16]

Age: 16
Income: $900/mo - yes, earned through work
Want to: save for university and down payment on an absoluteworld condominum flip deal

What would be the best way to approach this situation, I'm thinking of $400/mo in RESP and $400/mo in Mutual Funds. Remaining $100 for spending?

[Mad.Whack]

Is there even a point in putting money in an RESP since you'll be going to UNI in 3 years? Why don't you stick with GICs and not lose money?

[gman]

Is there even a point in putting money in an RESP since you'll be going to UNI in 3 years? Why don't you stick with GICs and not lose money?

May be because the government will give you some extra money if you do so (assuming he has RESP already). RESP can be interest based too. Of course, the growth of the "investment" is also tax free.

[Lyrrad0]

If you plan on using the RESP, you should find out how much you can put into it and get the 20% bonus. 20% free money is pretty much the best investment you can make, and you can spend it on almost anything (I think), if you do post-secondary studies. If you didn't max it out in previous years, I think you can catch up to an extent, but you should probably double-check that with a professional. Since university is only 3 years away, you should probably be conservative in your investments.

[gman]

If you plan on using the RESP, you should find out how much you can put into it and get the 20% bonus. 20% free money is pretty much the best investment you can make, and you can spend it on almost anything (I think), if you do post-secondary studies. If you didn't max it out in previous years, I think you can catch up to an extent, but you should probably double-check that with a professional. Since university is only 3 years away, you should probably be conservative in your investments.

The max. of RESP bonus is $400 (to $500 if family income qualify). The effective RESP contribution that can get government bonus is $2000 per year.
However, since he is already 16, if he does not have RESP already, he won't get the bonus.

[Lyrrad0]

The max. of RESP bonus is $400 (to $500 if family income qualify). The effective RESP contribution that can get government bonus is $2000 per year.
However, since he is already 16, if he does not have RESP already, he won't get the bonus.

Is that part of the "special conditions" mentioned here?

http://www.cra-arc.gc.ca/E/pub/tg/rc4092/rc4092-e.html

Beneficiaries qualify for a grant on the contributions made on their behalf before the end of the calendar year in which they turn 17 years of age. However, special conditions must be met by the end of the calendar year in which the beneficiary turns 15.

Here is a page that indicates you may be able to catch up on RESP contributions if you're behind:

http://www.hrsdc.gc.ca/asp/gateway.asp?hr=/en/hip/lld/cesg/publicsection/CESP/CESG_FAQs.shtml&hs=cgs

What happens if a parent does not apply for the CESG right away?

The earlier a parent applies for the CESG, the sooner the grant money starts to grow in an RESP. If a parent does not apply right away however, the child is still eligible for certain unused grants. Since 1998 unused grant room accumulates at a rate of $400 a year, which may be carried forward to future years, including the year in which the child turns 17. However, the additional amounts for modest- and middle-income families introduced in January 2005 will not be added to grant room available for future years.

[gman]

Is that part of the "special conditions" mentioned here?

http://www.cra-arc.gc.ca/E/pub/tg/rc4092/rc4092-e.html


Here is a page that indicates you may be able to catch up on RESP contributions if you're behind:

http://www.hrsdc.gc.ca/asp/gateway.asp?hr=/en/hip/lld/cesg/publicsection/CESP/CESG_FAQs.shtml&hs=cgs

http://www.hrsdc.gc.ca/en/hip/lld/cesg/publicsection/CESP/CESG_FAQs.shtml#Q3

3. What if the child is 16 or 17 years of age?

The Canada Education Savings Grant Program has been designed to encourage long term savings for post-secondary education. There are special rules for beneficiaries in the years they become age 16 or 17. RESPs for beneficiaries aged 16 and 17 will be eligible only if at least one of the following conditions is met:

*
a minimum of $2,000 of contributions has been made to, and not withdrawn from, RESPs in respect of the beneficiary before the year in which the beneficiary attains 16 years of age; or
*
a minimum of $100 in annual contributions has been made to, and not withdrawn from, RESPs in respect of the beneficiary in at least any four years before the year in which the beneficiary attains 16 years of age.


This means that you must start to save in RESPs for your child before the end of the calendar year in which they turn 15 years of age in order to be eligible for the grant.