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18- PORT PERRY STAR - Tuesday, January 31, 1995 "Scugog's Community Newspaper of Choice" pei RESP helps prepare for cost of education Although your children may only be of preschool or primary school age, the time to begin thinking about their post- secondary education is now. Recent estimates have placed the cost of a four-year universi- ty education, with expenses such as tuition, books, food and lodging, at almost $40,000. With funding cutbacks and ex- penses on the rise, that figure could be closer to $100,000 by the time your children reach university age. Fortunately there are several ways for parents to attain the fi- nancial goals necessary to pay for a post-secondary education. A traditional method of sav- ing for future educational costs is to invest a small amount on a monthly basis in Canada Sav- ings Bonds (CSBs). DJ TAYLOR INSURANCE BROKERS LTD. 169 North St., Port Perry L9L1B7 Guaranteed Investment Certificates (Rates Subject to Change without Notice) G.1.C. FIVE YEAR 8.185% PHONE 985-8416 Quality Advice A monthly investmefat of $30 in CSBs, compounded for 18 years at 10 per cent (the aver- age rate of return for CSBs over the last 10 years was approxi- mately nine per cent), will be worth over $17,000 by the time your child is ready for universi- ty. If your child attends a local university, this money could go a long way to financing the ma- jority of their education. But if he or she decides to attend an out-of-town school, a necessity for many Canadians without a local university, the money you've saved will not meet the cost. An alternative method for ac- cumulating education savings exists in Registered Education Savings Plans (RESPs). An RESP is a government- approved plan that enables par- ROV SEMINARS ents to save for their children's post-secondary education. Un- like a Registered Retirement Savings Plan (RRSP), in which contributions are tax deducti- ble, contributions to an RESP are made with after-tax dollars so you are not allowed to claim any deductions. But like an RRSP, earnings within the plan are sheltered and compound tax free. You can buy an RESP from one of several non-profit organi- zations such as the Canadian Scholarship Trust Foundation. Accumulated contributions, usually made on a monthly or annual basis, from the principal which finances the first year of education at a university, tech- nical institute or college. Accu- mulated interest on the princi- pal creates a kind of scholarship 4 World Class Service Invest your time before you invest your money... NESBITT BURNS UNCERTAIN ABOUT YOUR INVESTMENT OPTIONS? Want clear conservative options? Invest your time before you invest your money... If you are over 50 years of age with accumulated retirement and investment holdings...plan to attend these complimentary Retirement and Investment Planning Seminars John A. Grove: Mr. Grove is a Senior Investment Advisor at Nesbitt Burns, Canada's largest investment firm, a subsidiary of the Bank of Montreal. As an advisor, Mr. Grove works with individuals planning prudent investment strategies. RETIREMENT & INVESTMENT TOPICS | John A. Grove is a resident of Stouffville * RSP Investments * How to Choose the Right ffivestments * Investment Planning o Estate Planning o How to Reduce Your Taxes 7:00-8:30pm 7:00-8:30pm "Stables of Greystone" 2130 Shirley Road February 1, February 2 7:00-8:30pm "The Briars" 55 Hedge Road STOUFFVILLE DATES January 18, January 19, February 16 "Maples of Ballantrae Lodge & Golf Club" Hwy 48 - 1 mile north of Bloomington Road Complimentary Sandwiches and Sweets January 24, January 26, February 16 Complimentary Sandwiches and Sweets (64000) {€) IV DY. DNS Complimentary Sandwiches and Sweets WHO SHOULD ATTEND THESE SEMINARS * Those desiring a second opinion on RSP and investment planning strategies * Those without effective investment strategies * Individuals wishing to reduce quarterly tax payments * Those who want to maximize their RSP investment returns Admission is Complimentary - Seating is Limited Call (416) 586-1035 (Collect) or (905) 642-6557 to Reserve that pays for each subsequent year of study. However, your ¢hild may de- cide not to attend post- secondary school or choose not to return to school after their in- itial year of study. If that hap- pens, the scholarships are lost and the child will receive only the principal. Only those stu- dents who continue their educa- tion will benefit from this type of RESP. An RESP, such as the type of- fered by Trimark Mutual Funds, offers greater flexibility and the potential to build a larg- er pool of savings. You can make contributions at any time of the year, up to a maximum limit. The current maximum limit on contributions is $1,500 a year for 21 years, for a cumulative maximum of $31,600 for each beneficiary. In the event that the child, on whose behalf you have estab- lished the RESP, decides not to attend either university or col- lege, the funds canbe used to as- sist another child, relative or even you or your spouse should you decide to return to school to take a course or a degree. Un- like a scholarship trust, you can even sell the growth in your plan ifyou are unable to useit. - Once the RESP grows in val- ue to $10,000 or $15,000, some parents transfer the plan to a . self-directed RESP, perhaps se- lecting a low-risk money mar- ket fund or bond strip coupons. Strip coupons can be timed to mature when your child is ex- pected to enroll in a post- secondary institution, An alternative to strip cou- pons is to invest in high growth equity mutual funds. They" might be your best option. Mu- tual funds generally provide historically higher rates of re- turn over the long term, which is advantageous since your child's needs will only be real- ized in several years time. If the annual rate of return is 10 per cent, an investment of $1,500 a year at the beginning of each year would be worth $18,869 after eight years. After 21 years, the RESP would be worth about $105,604 - approxi- mately what you will need to fi- nance your child's post- secondary education. The trick is to begin saving as soon as possible so that you and your child can benefit from com- pound growth within an RESP. An investment now in an RESP is an investment in your child's future. Courtesy of, Bob Gow, Richardson Greenshields, Oshawa Financial Planning with the experts!