If you have one or more children, saving for their future is one of the most important financial goals you can undertake. Not only will it help them live a better life down the road, but saving money for them can ensure that they can get the best education possible.
Luckily, that’s exactly what an RESP account is for and, even better, there are many financial institutions where you can sign up for one in Canada, such as Wealthsimple. Check out this review to learn more about the Wealthsimple RESP.
Wealthsimple RESP Account
Short for Registered Education Savings Plan, an RESP is a government-registered account that allows you to save for your children’s post-secondary education. Like an RRSP (Registered Retirement Savings Plan), any money you invest is tax-sheltered, which means it won’t be subject to taxation until you make a withdrawal.
As a parent, you can deposit $50,000 (lifetime maximum) into each of your children’s RESP accounts and, to promote usage, the government will match up to 20% of your yearly contributions when you invest at least $2,500 a year ($500 yearly limit or $7,200 lifetime limit per child). This is known as the Canada Savings Education Grant (CESG).
Learn more about how to pay for your child’s education.
Types Of RESP Accounts At Wealthsimple
Wealthsimple is an online financial platform that offers its own version of the RESP. Actually, there are two types of RESP accounts you can acquire through Wealthsimple:
Individual RESP
Depending on how many children you have, you might want to open an account for each kid or a family account for multiple kids. As you can guess, an individual RESP is meant for a single child (a.k.a your beneficiary).
Family RESP
When you have multiple kids who are all siblings, it may be better if you add each of them to a family RESP. That said, the maximum contribution limit for family RESPs and CESGs is still per-child. Here’s an example:
If you have 4 child dependents, your lifetime family RESP limit is $200,000 (4 x $50,000) and your lifetime family CESG limit is $28,800 (4 x $7,200).
Check out these tax credits and benefits for parents.
How Have Wealthsimple’s RESP Portfolios Performed?
While it’s always a smart idea to go back and review how certain funds have performed in the past, it’s important to understand that returns are not a 100% guarantee when it comes to RESP accounts.
Wealthsimple offers several kinds of RESP portfolios to match your investment goals, savings timeframe and preferred level of risk. Currently, the most popular ones are:
- Conservative Portfolio = 65% fixed income & 35% stocks
- Balanced Portfolio = 50% fixed income & 50% stocks
- Growth Portfolio = 10% – 25%% fixed income & 75% – 90% stocks
Types Of ETFs You Can Add To Your RESP Account
Additionally, the following Exchange-Traded Funds (ETFs) can be included in your RESP portfolio, depending on what type of risk profile you have as a contributor:
- BMO Long Federal Bond Index ETF (ZFL)
- iShares MSCI Min Vol Emerging Market Fund (EEMV)
- iShares Core Canadian Short Term Corporate Bond Index ETF (XSH)
- SPDR Gold MiniShares Trust (GLDM)
- Vanguard Total Stock Market (VTI)
- Vanguard US Total Market ETF (VUS)
Fees To Open A Wealthsimple RESP Account
The fees associated with your RESP account will vary based on your membership status and transactions. Wealthsimple currently offers three different membership tiers:
- Wealthsimple Basic – This basic plan has a deposit limit of $0 – $100,000 and a 0.50% management fee. It also comes with added features such as a personalized portfolio, dividend reinvestment and auto-deposits.
- Wealthsimple Black – This plan is for those who want to deposit over $100K. It charges a reduced management fee of 0.40%. With this membership plan, you get all the features of the Basic account and other perks, like tax-loss harvesting, a financial planning session, and tax efficient funds.
- Wealthsimple Generation – This plan is for deposits over $500,000. It comes with everything the Black account does, plus perks like asset location and 50% off Medcan’s Comprehensive Care plan, for a 0.40% management fee.
Other Wealthsimple RESP Account Fees
You could be charged other fees when using your RESP, including but not limited to:
- ETF Management Expense Ratios (MERs) – This refers to a 20% average annual fee that you must pay toward Wealthsimple’s ETF providers.
- Asset Transactions – Ceratin foreign investment actions may be subject to a 20% FX (foreign exchange) fee.
Benefits Of Opening An RESP At Wealthsimple
Before you sign up for any sort of investment account, make sure the financial institution you’re getting it from is legitimate, trustworthy and offering all the features you want. For example, here are some of the main advantages to opening a Wealthsimple RESP account:
- Low Costs – As mentioned, Wealthsimple charges affordable management fees compared to other investment platforms and managers in Canada (0.4% – 0.5%).
- Free Automatic Rebalancing – If the investment market changes, Wealthsimple will accurately rebalance your RESP portfolio to minimize risk and maintain profit.
- Convenience – You can access and contribute to your RESP any time you wish by logging into Wealthsimple’s user-friendly web browser or mobile app.
- No Minimum Balance – With Wealthsimple, you can start investing in your RESP with as little as $1.
How To Open A Wealthsimple RESP Account?
The process to open a Wealthsimple RESP only takes about 5 minutes and can be done entirely online via your computer or mobile device. To register, you’ll need the following information:
- Your email address and password (you must subscribe to get started)
- The Social Insurance Numbers (SIN) of all parties (yours and your children’s)
- The name and date of birth of each dependent
- Details about the contributor (you can also add a spouse or common-law partner as a co-owner)
Wealthsimple RESP Account FAQs
Are Wealthsimple RESPs safe?
Does Wealthsimple have RESP accounts?
Can I transfer an existing RESP to Wealthsimple?
Bottom Line
If you’re looking to invest in your children’s future, contributing to a Wealthsimple RESP may be the best solution. Visit Wealthsimple.com for more details about their RESP accounts and other investment products. You can also contact their customer service department via email or using their 24/7 Virtual Assistant and by phone or instant message during business hours.
