Compound Growth

The earlier you start saving for your child’s education with an RESP, the earlier you can start taking advantage of compound growth.

What is compound growth?

Think of it as a financial “snowball effect” that occurs when you put your money in an investment that delivers a return and then your earnings are reinvested. When you continually reinvest your returns to produce even greater ones, that’s compound growth. This benefit is something you can take advantage of during the entire life of your RESP. The longer you invest your money, the greater the opportunity for growth.

Starting early means saving more

graph showing difference in accumulated values at age 18 based on the Flex First PlanIf you start saving when your child is born, the greater timeframe will allow you to save more money for their education. And with an RESP, you can earn more money in the end too, with government grants and compound growth.

Values illustrated are based on the Flex First Plan, by the beneficiary ages at which the plan is opened. Amount Invested is the money contributed to the plan (assuming all planned contributions are made), less fees as described in the Prospectus. Contributions of $100 per month are assumed to start in January of the year the plan is opened for the beneficiary, with the last contribution in December of the calendar year in which the beneficiary turns age 17.

Canada Education Savings Grant (CESG) payments are assumed to be 20% of contributions. Income earned on the Amount Invested and CESG is compounded monthly, up to July 31 of the year the beneficiary turns 18, based on an assumed 5% annual rate of return, less fees. This comparison is strictly for illustrative purposes and is not intended to represent any actual or future investment performance. The actual funds available will vary and may be less or more than illustrated here.

Future Education Costs in Canada to 2035

Having a clear understanding about the costs associated with post-secondary education will help you determine how much to save.

Forms & Resources

  • Understanding Accumulated Grant Room

    Read More
  • Knowledge First Financial’s Grant Maximizer Tool

    Read More

We’re here to help

Find contact information for your Knowledge First Financial sales representative, or see a list of our locations.

Find a sales representative