How the RESP and CESG actually work
A Registered Education Savings Plan is a tax-deferred account for a child’s post-secondary education. The Canada Education Savings Grant (CESG) matches 20% of your contributions up to $500 per year per child, $7,200 lifetime. Growth inside is tax-deferred, and when withdrawn, the growth and grant portion is taxed in the student’s hands, usually at a 0% bracket. Lower-income families also get the Canada Learning Bond (CLB), worth up to $2,000 with no contribution needed.
Contribute $2,500 a year per child from birth to age 14, the CESG adds $500 a year, $7,000 total. Combined $42,000 of contributions plus $7,000 of grants, invested in a balanced ETF at 6%, grows to roughly $73,000 by age 18. The CESG match alone is a guaranteed 20% return in year one, before any market return.
Skipping the RESP because you are not sure your kid goes to university. Trade school, CEGEP, and most colleges qualify. Even if they truly do not pursue education, contributions come back to you and growth can be transferred to your RRSP with room.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.