Skip to Main Content
  • CIBC.com
  • CIBC Private Wealth
  • CIBC Websites
Client Login
  • Home
  • Behavioural Approach
  • Our People
  • Investment Mandates
    • Family Wealth Portfolios
    • Institutional Asset Management
  • Media & Resources
    • FAQ
    • Media
    • Social Media
  • CIBC.com
  • CIBC Private Wealth
  • CIBC Websites
  • Client Login
 CIBC Private Wealth, Wood Gundy  CIBC Private Wealth, Wood Gundy

Solinvest.ca

  • Home
  • Behavioural Approach
  • Our People
  • Investment Mandates
    • Family Wealth Portfolios
    • Institutional Asset Management
  • Media & Resources
    • FAQ
    • Media
    • Social Media

Media

Address 1055 Dunsmuir Street Suite 2434 Vancouver BC, V7X 1K8
Telephone Number (877) 331-5122
Email Email us
Email Email
Telephone Number Tel

Coreen T Sol

January 24, 2023

Facebook
LinkedIn
Twitter
two boys playing with coins

Grants Are Not All They're Cracked Up To Be

It’s natural to think that maximizing government grants are the best way to take advantage of the Canadian Registered Education Savings Plan, but you’d be mistaken.

The restrictions on plan contributions are relatively simple. You can contribute a maximum of $50,000 per beneficiary. Still, only the first $2500 contributed each year will attract the 20% Canada Education Savings Grant (CESG) to a maximum grant of $7200 per beneficiary.

To maximize the grant, you can contribute $2500 per year for 14 years to collect $500 per year in grant money. Then contribute the last $1000 to collect the final grant of $200. This scenario means you’ll contribute a total of $36,000, receive the maximum $7200 in CESG, and at 5%, you’ll amass $76,500 when the child begins university.

However, due to the magic of compounding, you’re better off contributing the whole amount upfront instead of periodic savings. If you don’t believe me, here’s the math.

Contributing $50,000 when the child is born will attract $500 in CESG. You will forgo the rest of the $6700 CESG, but compound returns will make up more than the difference. After 18 years, your investment will be worth $121,500. To make the comparison fair, consider a contribution of $36,000 when the child is born, only collecting $500 CESG. What do you think the value of the plan will be compared to periodic savings?

You’ll have over $11,300 by giving up most of the CESG and contributing the funds upfront.

Related posts

Coreen T Sol

September 25, 2020

Two kids

Using an RESP to your advantage

A Registered Education Savings Plan (RESP) is a tax shelter flexible enough for more than just saving for your children's or grandchildren's post-secondary education. By understanding the functionalit...

Read more

Coreen T Sol

January 11, 2023

Unbiased Investor: Reduce Financial Stress & Keep More of Your Money

New Years Resolutions Are More Effective When You Consider Your Values

As the new year begins, it's time to think about how you can make 2023 our best year yet – financially. Your values are an important part of this process.

Read more
 
 
  • Rates
  • FAQ
  • Agreements
  • Trademarks & Disclaimers
  • Privacy & Security
  • CIRO AdvisorReport
  • Accessibility at CIBC
  • Manage Cookie Preferences
  • Cookie Policy
 Canadian Investment Regulatory Organization  Canadian Investor Protection Fund

CIBC Private Wealth” consists of services provided by CIBC and certain of its subsidiaries through CIBC Private Banking; CIBC Private Investment Counsel, a division of CIBC Asset Management Inc. (“CAM”); CIBC Trust Corporation; and CIBC Wood Gundy, a division of CIBC World Markets Inc. (“WMI”). CIBC Private Banking provides solutions from CIBC Investor Services Inc. (“ISI”), CAM and credit products. CIBC Private Wealth services are available to qualified individuals. Insurance services are only available through CIBC Wood Gundy Financial Services Inc. In Quebec, insurance services are only available through CIBC Wood Gundy Financial Services (Quebec) Inc.


CIBC Private Wealth services are available to qualified individuals. The CIBC logo and “CIBC Private Wealth” are trademarks of CIBC, used under license.