ElliottGalt wrote: ↑Oct 31st, 2016 5:07 pmI am replying on my phone--please excuse any missed points, it is a cumbersome process, especially with so many people to respond too.The kid is taxed only on earnings and subventions, not the contributions you made. You can also roll your RESP, minus the subventions, into an rrsp if you still have the room available if you're kids doesn't go beyond high school. Seriously, RESP are great and should definitely be used. The only time wehre you might lose out using an resp is if you only have a kid who doesn't go to school, no rrsp room and no other kid to to send the subvention to. Your advice only apply if you know your kid won't go far in school, which is almost impossible to know if you start it at the birth of your child.
Student is taxed on the government "free" money
Student is taxed on any return on investments
You can roll the RESP into your RRSP
--you lose your government "free" money
--you will pay tax on the money earned in the RESP at your marginal rate +an additional 20%
RESP are better than a TFSA IF your child goes to a qualifying school.
However IF they do not, TFSAs are far better.
This is all about choice on how people deal with risk.
Because I don't know the future, I don't know if my child will use the grant, I would rather be in the position of not having the grant money, yet having it all tax free and able to be used in a way that can benefit my child in anyway I want vs being restricted and having a reduced overall return and no grant money if they don't go to school.
If TFSA and RRSP are already maxed--yeah do a RESP
Sorry, it sounds like you're still not able to understand why an RESP trumps a TFSA for funding a kid's EDUCATION. I don't think any amount of discussion will convince you otherwise, so just agree to disagree with everyone posting in this thread.ElliottGalt wrote: ↑Oct 31st, 2016 5:17 pmI replied to the other poster which addresses what you wrote. I agree ideally we would have everything maxed but I still maintain that the RESP is only better IF your kid goes to school and is worse if they don't.
I hedge my bets and do TFSA as it give less down side
I would NEVER give up valuable TFSA room for education while the ideal account for such a purpose is readily available and easy to setup. You keep mentioning "risk", but the biggest risk you take is the possibility of your child not going to school. It's a highly unlikely scenario as they have 35 years from the time of account open to actually go to school. Even if they don't go, it's no big loss and still definitely not worth taking up TFSA room for.