How to save money for your grandchildren in Ontario? Top 4 ways [2023]
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Do you wish to protect the future of your grandchildren? Here are the four best ways. Following them, you can let your descendants enjoy good fortune. See what Andrew did and how you can save money too. Are you considering setting aside money for your grandchildren? Read out the top four ways below:
Top Four Ways to Save Money
Various investment policies might provide you with huge benefits. While they all have perks, they also have some drawbacks. It is better to ensure that the plans you are considering are truly beneficial. To make things easier, we have listed the top four ways for you to save money for your grandchildren.
1. Cash
It will be a wonderful feeling to see the joy on their faces when you give them the money you have saved for them. Because there is no gift tax in Canada, giving your grandchild cash money might be a fantastic present.
But, any income earned by the cash gifts is credited to you if given to a minor child. The money credited is kept in a non-registered investment account.
2. TFSAs
You may deposit money into tax-free savings accounts. You get to watch it build and withdraw it tax-free whenever you want. You can invest in a TFSA for grandchildren who are aged 18 or older. Besides what goes into an RESP, a TFSA might be a good place to keep whatever money you have left over.
3. Contribute to RESPs
You can contribute to your grandchild’s education through Registered Education Savings Plans (RESPs). It is a government-sponsored educational savings program in Canada. You can create a plan with your children and contribute to your grandchildren’s RESPs. You can choose the family plan, individual plan, or group plan.
- Family plan: If you have many grandchildren and wish to split the earnings, the family plan is ideal.
- Individual plan: This is a good option if you are not related to the child for whom you are saving. There should only be one beneficiary, and you must be unrelated to the beneficiary.
- Group plan: It’s ideal for one child who isn’t related to you.
Andrew, 68, wanted to surprise his granddaughter Sarah on her fourth birthday. So, after much consideration, he decided to contribute to his granddaughter’s education. With the support of his son, he was able to deposit money into the RESP that would help Sarah with her post-secondary education.
4. RRSP
RRSP (Registered Retirement Savings Plan) is a retirement savings plan. An RRSP savings account does not allow tax-free withdrawals. But it does allow tax-free growth of savings and investments. It’s also crucial to double-check that there’s enough contribution room.
Many of us, like Andrew, consider leaving a legacy behind. We all want to guarantee that our families do not face financial problems at any time in their life. Giving cash money is a convenient way to gift someone. But, by investing our money, we can support our family and loved ones in the long haul.
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