Many people who have a Registered Education Savings Plan (RESP) save for many years. Like any other way you invest, what you get depends on a few factors.

Top five things that affect what your RESP will pay:

1. How much money will you put in each year?

The March 2007 budget removed any yearly limits on how much you can save. It also increased the lifetime total you can save for each child in an RESP from $42,000 to $50,000.

2. How much money will you get from government grants?

You can now get up to $500 a year for each child. The total lifetime grant for each child is $7,200.

Examples: Let’s say you save $1,000 a year in an RESP. You would get a grant of $200 a year from the government to top up your savings. If you saved $2,500 a year, you would get the full $500. Families with a total household income under $70,000 could get even more.

3. How many years will you save and invest?

The longer you save, the more time your money has to grow.

Example: Let’s say you save $30 a month for 10 years. You will have put $3,600 into the plan in total. You would get at least another $720 from the government. With interest at 5%, those dollars could grow to more than $5,500 in 10 years.

The power of saving early: A tale of two families
Saving early can really affect how much you will have in your RESP when your child starts school. Find out the difference it made for two families. Read A tale of two families.

4. How much will you make investing?

If you put your money in a savings account, the interest rate tells you how fast it will grow each year. With other choices, like stocks and mutual funds, you don’t know what you’ll make. You could even lose money if your investments don’t work out.

Tip: If you are worried about choosing investments on your own, you may want to choose an RESP where an expert invests your savings for you.

5. What costs will you pay?

With some RESPs, your only costs are what it costs to invest. With other RESPs, you pay fees to join. You may also pay fees each year you stay in the plan. You are more likely to have higher costs if your plan has an expert in charge.

Remember: An RESP is a long-term savings plan.

It really helps to put time on your side. Other factors can also affect how much your savings will grow. Make sure you understand how they work so you can make the most of your savings.