The RESP math most parents miss

The RESP's headline feature is the only guaranteed 20% return in Canadian investing: the federal CESG matches 20 cents on every dollar you contribute, up to $500 of grant per year. Contribute $2,500 a year and you capture the full match every year — at that pace the $7,200 lifetime grant cap is reached in the fifteenth year, which is why "$2,500 from birth" is the standard advice. Contributing more than $2,500 in a normal year adds savings but earns no extra grant.

Started late? Carry-forward is the rescue mechanism: each year of unused grant room lets you double up to $5,000 of matched contributions (one missed year at a time), earning up to $1,000 of CESG in a single year. A family starting at age 8 can still collect most of the $7,200 cap by age 17 — run your own ages through the calculator above to see the exact path.

Three rules that catch people at withdrawal time: grant and growth money (the "EAP" portion) is taxed in the student's hands — usually at little or no tax, since students have low income; your original contributions come back tax-free at any time; and the $50,000 lifetime contribution cap per child carries a penalty tax on excess amounts, so blended families with multiple plans for one child need to coordinate.

A practical funding trick: many families route part of their monthly Canada Child Benefit into the RESP — $209/month covers the full $2,500 annual match. If you're choosing between accounts, the TFSA calculator makes a good side-by-side comparison for money you may not want locked to education.