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Updated 2mo ago.
Updated 2mo ago.
The RESP is a registered account designed to save for a child's post-secondary education. The federal government adds a grant (CESG) of 20% on the first $2,500 contributed per year, up to a lifetime maximum of $7,200 per child.
You contribute $2,500 per year to your child's RESP. The government automatically adds $500 in CESG (20%). If you invest that $3,000 in an index ETF like XIU.TO, after 18 years of compound growth, the account could be worth far more than your contributions alone.
The RESP is essentially free money from the government. The 20% CESG is a guaranteed immediate return — no investment can beat that. Starting early maximizes the compounding effect on both the grant AND your contributions.