Here’s the Average RESP Balance and How to Boost it Big Time

The RESP can be an excellent tool for saving for a child’s future. But is the average enough? And where do you fall?

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In 2024, the average Registered Education Savings Plan (RESP) balance for Canadian families is around $30,000. However, this can vary depending on how early the plan was started and contributions made. Even so, with government grants and investment growth, many families aim for that sweet spot to cover a chunk of their kids’ future education costs. Yet some balances can be higher depending on saving habits and market performance. Depending on where you fall, is it really enough?

A good start

While $30,000 in an RESP is a great start, it may not be enough to fully cover your child’s post-secondary education, especially if they plan on attending a four-year university program. Tuition alone can range from $6,000 to $10,000 per year, depending on the program and province. And that doesn’t even include books, supplies, or living expenses. If your kid is staying at home, it’ll stretch further, but if they’re moving away, costs like rent and food add up quickly.

That being said, any amount helps. Having an RESP in place means you’re giving your child a solid financial boost. Plus, with the government adding grants to your contributions, the money grows faster than it would in a regular savings account. While you might need to supplement with other savings or scholarships, you’re already ahead of the game by planning for your child’s future education. Every little bit counts!

Bump it up

To bump up that RESP savings even more, consider making small, consistent contributions over time. You don’t need to drop big chunks of cash all at once. Just set up an automatic transfer every month and let it grow. Plus, don’t forget about those sweet government grants! The Canada Education Savings Grant (CESG) matches 20% of your annual contributions up to $500 a year. So, be sure to contribute at least $2,500 annually to max out that free money. Over the years, those grants really add up and can give your savings a nice little boost.

Another trick to grow that RESP balance is to invest wisely within the account. RESPs allow for a variety of investment options like mutual funds, exchange-traded funds (ETF), or bonds, depending on your risk tolerance and timeline. Starting early gives you more time to take advantage of compound interest and market growth. Even small investment gains over the years can lead to a bigger balance when it’s time to pay those tuition bills. Just remember to review your investments regularly and adjust as needed, especially as your child gets closer to heading off to school!

Consider this ETF

Investing in an ETF like BMO S&P/TSX Capped Composite Index ETF (TSX:ZCN) can be a smart move for growing your RESP. It gives you instant exposure to a wide range of Canadian companies across different sectors. Instead of picking individual stocks, you get a little piece of everything. From banking and energy to technology and healthcare, spreading out your risk. Over time, as these companies grow and the Canadian economy strengthens, your investment in ZCN can grow right along with it — all thanks to that built-in diversification.

Another reason ZCN is a solid choice is its low cost. With ETFs, the management fees are much lower compared to mutual funds. This means more of your money stays invested and working for you. Plus, ZCN mirrors the S&P/TSX Capped Composite Index, which historically has shown long-term growth. So, by holding ZCN in your RESP, you’re setting yourself up to take advantage of the steady growth of the Canadian market. And this can really help boost that balance — all by the time your kid heads to college or university!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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