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FUTUREFUTURE
INVESTINVESTIN THEIN THE
Now, I can realize my dreams...
Your Child...
• You give your child all the care and love he needs to grow and achieve his potential.
• Even though he is small, you have big dreams for him.
• You want to give him everything he needs to succeed in life on a personal and professional level.
Your Child’s Future...
Giving your child the opportunity to pursue post-secondary studies is one of your most precious projects.
• Your goals are important for you and we understand.
• How can we help you realize them?
Your Child’s Future...
A Canadian study shows that a post-secondary education and training are becoming increasingly important
• In the 2000s: – 65% of new jobs, i.e., almost 2 out of 3 jobs, will
require a post-secondary degree.
Source: Statistics Canada
Is an Education Important?
Education and the Government
• Governments have decreased their spending in the education sector. Consequences:– Reduction of the amounts allocated to educational
institutions– Educational institutions have increased their tuition
fees
Increased Tuition Fees* (university)
• In the last 10 years, tuition fees have increased by 135%
– In 1993: $1,588 per year– In 2003: $3,733 per year
* Canadian average according to Statistics Canada
The Cost of a University Education (over 4 years)
$14,932
$50,000
$23,540
$85,122
$0
$20,000
$40,000
$60,000
$80,000
$100,000
2003 2021
* Estimated with a 3% inflation rate
Child living at home
Child living away from home to study
The Solution...
• The Registered Education Savings Plan, commonly known as the RESP, is the most realistic alternative for saving for a child’s education.
• The RESP is to studies what the RRSP is to retirement!
Why Choose the RESP
The RESP is the top financial tool to accumulate amounts for your child’s education.
• The advantages of the RESP:– Tax-sheltered investment income– Canada Education Savings Grant (CESG)– Savings plan more flexible than before
DIPLOMA … an
excellent savings vehicle for your child’s post-secondary education!
DIPLOMA … an
excellent savings vehicle for your child’s post-secondary education!
The RESP...
The People Involved...
SUBSCRIBER:• Parents, grandparents,
uncle, aunt, godfather, godmother
BENEFICIARY:• a child age 14 or under
$$$
C Contributions
The RESP
• The amounts invested in an RESP are made up of:
Contributions
• Through monthly payments (PAC) until age 18*– Minimum: $25 per month– no enrolment fees
• Additional lump-sum deposits• Transfers from other RESPs• The maximum contributions per beneficiary are:
– $4,000 per year– $42,000 lifetime
*until December 31 of the designated beneficiary’s 17th birthday
C Contributions
G The Grant
The RESP
• The amounts invested in an RESP are made up of:
The CESG
Amount of the CESG:
– 20% of annual contributions– Annual maximum of $400– Total maximum of $7,200– Paid monthly (by the federal government)
– Taxable only upon withdrawal– Unused grant rights deferred to subsequent years
The RESP
Investment income
• The amounts invested in an RESP are made up of:
Taxable only upon withdrawal
C Contributions
G The grant
I
Diploma Fund
40%
30%
20%
10%
Money Market
Fixed-incomesecuritiesCanadian Equities
U.S. indexinvestmentInternationalindex investment
35%
50%
7.5%5.0%
2.5%
Diploma Elementary Fund
Diploma Secondary Fund
Diploma Investment
Automatic rebalancing on the beneficiary’s birthday
Distribution of Diploma Assets
Exclusive Exclusive to to DIPLOMADIPLOMA
The RESP
Investment income
• The amounts invested in an RESP are made up of:
C Contributions
G The grant
I
B The education bonus
The Education Bonus
• Exclusive on the market • Paid if all PAC contributions have been made• Bonus established according to the beneficiary’s
age at issue and can reach up to 15% (including lump-sum depostis acccording to the beneficiary's
age when each deposit is made) • Paid in the form of Educational Assistance
Payments (EAP)
MONTHLY PAYMENTS (PAC)
MONTHLY PAYMENTS (PAC)
Your Commitment
• The education bonus is paid to the RESP to compensate for your efforts at the end of your commitment period, i.e., until the child (beneficiary) reaches age 18.
• Therefore, a delay in your monthly PAC payments could lead to penalties.
Late PAC
Plan duration Grace period
36 months and less 3 months
37 months and more 6 months
Fees are applicable at the end of the grace period
Diploma - Contributions
Issue
Grace period
3 to 6 months
Month
Surrender fees
Recuperation period
0 to 24 months
Just in Case...
To help you respect your commitment and to ensure the continuity of your contributions, additional benefits can be added to your education savings plan:
– Contribution in the event of the subscriber’s death
– Contribution in the event of the subscriber’s disability
YOUR CHILD IS READY FOR POST-SECONDARY STUDIES
The Educational Assistance Payment (EAP)
EAP Beneficiary
The subscriber can withdraw contributionsC
G
I
BTAXABLE
NON-TAXABLE
Beginning of Studies
• Proof of registration required (only)• The subscriber decides on the frequence and
amounts to be paid to the beneficiary• Admissible educational institution:
– Almost any college (CEGEP) or university in Canada– For a foreign college or university:
• course that lasts a minimum of 13 consecutive weeks.
Admissible Studies
• Admissible training program:– course that lasts a minimum of 3 consecutive
weeks– Minimum of 10 hours of courses (or homework)
per week– Training course not related to the student’s
employment
WHAT HAPPENS IF YOUR CHILD DOESN’T PURSUE POST-SECONDARY STUDIES
If the Beneficiary does not Pursue Post-Secondary Studies...
The subscriber has 4 choices:– Name another beneficiary– Transfer the accumulated income to his RRSP* or his
spouse’s RRSP – Withdraw the accumulated income from the RESP*
(100% taxable + 20% penalty)
– Make a donation to a recognized educational institution
* the grant must be returned to the government
The Advantages of the Diploma RESP
RESP + CESG
RESP
Total deposits
RESP + CESG + BONUS
• Choosing Diploma is to offer yourself peace of mind knowing that your child will be able to pursue a post-secondary education if he wants to!
• Allows your child to start his adult life on the right foot.
• Even though he is small, you should start now!
The Advantages of the Diploma RESP
The Diploma RESPThe Diploma RESP...
For the grantFor the education bonusFor the tax-free accumulationTo diversify your investmentsFor the flexibility of changing the beneficiaryFor the possibility of transferring investment
income to your RRSP, if your child does not pursue a post-secondary education
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